FHRAI says close to 100 hoteliers encountered issues with Oyo post Covid-19, supports FIR

Oyo calls FIR and allegations frivolous and baseless, but says its committed to resolving hotelier disputes amicably and welcomes ecosystem support.

New Delhi: Industry association Federation of Hotel & Restaurant Associations of India (FHRAI) said on Thursday close to 100 hoteliers have encountered issues with Oyo as soon as the Covid-19 pandemic hit businesses, and came out in support of a Chandigarh based hotelier who has lodged an FIR against Oyo’s founder Ritesh Agarwal and Sandeep Lodha, CEO of Oyo’s brand Weddingz.in with the Mohali Police.

"Their business is more about hostility than hospitality,” said Gurbaxish Singh Kohli, VP, FHRAI.

In his FIR, Vikas Gupta, owner of Vikas Mineral Foods Private Limited, alleged Oyo accepted booking amounts for public functions at his property Casavillaz Resorts, which has a banquet hall, from at least 10 hosts by representing itself as the authorised service provider despite terminating the management services agreement with his company on March 31.


He has also alleged his authorised representatives were threatened with dire consequences of life when they pointed out Oyo accepted bookings after termination of the agreement.

“The accused persons may make unlawful gains of not less than Rs 6-7 crore...it is clear from the conduct of the accused persons they are running a scam, criminal conspiracy by committing criminal offences of fraud, cheating, criminal breach of trust,” Gupta stated in his FIR.

In a response to ET’s queries, Oyo said the matter pertained to a banquet hall that was part of the portfolio of Oyo's Weddingz business, and not a hotel and called the FIR frivolous and the allegations baseless.
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“Oyo has and will continue to refute baseless and publicity-oriented claims made against the company’s founder and other executives. In the present issue both the parties have agreed to the arbitration clause and have, as a matter of fact, accordingly nominated/proposed arbitrators vide their arbitration notices dated 24th April 2020 issued by Oyo’s counsel and dated 22nd May 2020 responded by the venue partner through his counsel,” an Oyo spokesperson said.

“Disputes between the contracting parties are civil and commercial in nature and there is no criminality involved...Frivolous FIRs in matters that are essentially civil disputes are filed against reputed CEOs, young Indian entrepreneurs damage the global reputation of Oyo Hotels & Homes and India as a destination for global business. Our legal team is looking into the matter and taking all the necessary steps as these claims are incorrect and defamatory in nature,” the spokesperson added.

The Oyo spokesperson also said the company currently has over 10,000 assets in India alone and while there have been disputes with about 100 hoteliers as stated by FHRAI, which would be about .01% of its portfolio, it is committed to resolving the issues amicably and welcomes any ecosystem support in this direction during these tough times. The spokesperson also stated Oyo has 'won back' many partner relationships in the last few months.

Gupta said fearing losses, Oyo went against terms of the signed agreement.
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"Instead of paying me damages for illegal backing out of the agreement, a new notice levelling criminal conspiracy was sent and I was asked to pay roughly Rs 5 crore in penalties. After terminating the contract abruptly and illegally from their end during the period of lockdown, Oyo forged emails and accepted quite a few bookings from the market for the upcoming season till December 2020,” he stated.

FHRAI said Oyo’s unethical business practices range from deep discounting to self-favorable, open-to-tweak contracts.
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“Disruptions caused by the pandemic have affected businesses everywhere, but Oyo now has resorted to manipulating agreements to coerce hoteliers out of it," said Kohli. "Not only did Oyo decide to abandon a business going through its worst phase, it further tried to intimidate the hotelier with penalties running into crores," he added.
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