Parvathi Shivam | October 21, 2022

Hotel storefronts for the company declined 29 per cent year on year

Gokul Krishnan, a thirty-year-old contractual government employee from Kerala, booked an OYO room online near Mysore for Rs. 2800 for three days in February, to attend an exam. At the time of check-in, the hotel denied the booking and asked him to seek help from OYO’s customer care. After several calls to customer care, OYO offered him a smaller room priced much below the original amount spent for his stay.

None of the customers shifted were refunded. The company follows a no refund policy, said the official cited above.

“It is a breach of contract from the side of OYO,” said Advocate Ravishankar, a lawyer who deals with consumer grievances in Chennai. “It comes under the purview of Sections 420 and 406 of the Indian Penal Code, for the offense of cheating and criminal breach of trust. It is a criminal offense and an unethical practice from the company.” These practices are not only alienating customers but also pushing away hotel proprietors.

“We get bookings through OYO, even if we are fully occupied”, said Ansip Habib a hotel proprietor from Kozhikode who canceled his contract with OYO a few months ago. “It’s an ultimate loss to us as we owe OYO for that missed booking too.” Vigneswaran, a hotel proprietor from Kodaikanal, said that suite rooms worth Rs 3500 were sold for Rs.500 to customers through OYO. It is not profitable for the proprietors as 20 to 25 percent of this trivial amount will be taken by the aggregator even if the client didn’t check in, he added.

According to the Draft Red Herring Prospectus (DRHP) filed by OYO in September, the company’s number of hotel storefronts declined by 29.6 per cent in July to 12,668 from 17,994 in March this year. The company said that the reason for the fall in hotel storefronts is due to the measures taken to improve gross booking value per storefront in a month.

The previous DRHP filed by the company last year says that as of March 31, 2021, 99.9 per cent of the storefronts did not have contracts with minimum guarantees or fixed payout commitments from OYO, with any investments, capital expenditure, and storefront employee costs.

All other expenses are borne by the hotel storefronts. There is no mention of the business model in the new addendum to the DRHP, even as the company continues to lose customers and proprietors.

Most of the customers The Bottomline spoke to had similar experiences more than three times. “I don’t trust OYO now, I use other platforms to book rooms,” said Krishna, a college student who was denied OYO bookings twice.

No changes have been made yet in the company’s consumer policies regarding refund even after complaints from the customers persist till date.