A new tension is brewing between OYO and its partner hotels. The situation has been brought about following some hotels denying reservations booked by on its website but at much lower than the rack rates. The hotels claim there is an agreement with OYO on what the minimum rates their rooms can be booked at. However, OYO offers bookings to certain VIP customers on its platform cheaper rates than these. The hotels are not happy with this action of OYO. According to a DNA report, the online hospitality major is hitting back at these partner hotels through financial penalties or other disincentives that can directly affect the hotels’ future business.
These details have come out of a communication OYO has sent to its partner hotels and it has been mentioned there that the penalty will be 2X the rates, though the company claims there is no fixed formula for levying the penalty. The other actions that OYO takes against such hotels which deny bookings could be more serious. Here, some of the benefits the hotels enjoy being on the OYO list are denied to them.
This can be in the nature of the hotel’s name being removed from the priority list on their platform. A complete delisting may follow if OYO decides the hotel is uncooperative. These can work against the interest of the hotel.
The hotel owners, on the other hand, are not happy with this stand taken by OYO. They claim the business is already low and making them offer rooms at such low rates will affect their finances. Levying penalties could mean further losses. One of the hotels has given the example with the figures. They say they had agreed with OYO that the minimum floor price will be Rs 1,800 per room night. They were surprised to find OYO making bookings at rates as low as Rs 500 and Rs 700. These for double and triple occupancy. The hotel promptly denied such bookings when the customer approached them. The hotel says their property was then blocked by OYO on their listings.
Hoteliers face another issue even after the delisting from OYO happens. Some of the online searches continue to show the old low rates which were reflected in the OYO platform and customers quote them while making bookings. OYO says it cannot be held responsible if some online sources don’t make changes on their sites. These are online travel agents or OTAs and OYO says it cannot speak for them.