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Has Oyo Rooms lost its Plot?

One of the most recognisable names from India’s startup successes, has had its fair share of days in the sun.

Vinay Nair
Jan 1 · 10 min read
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Let’s have a look at some of the key issues plaguing Oyo’s business right now, and what the company is planning to do about it?

OYO’s Murky Payout Practices

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More and more hotel owners have come forward to accuse Oyo of failing to pay them their minimum guaranteed fee.

Others have alleged that Oyo’s high inventory levels have pushed down their occupancy rates, and the company has used that as an excuse for deducting substantial sums from their contractually binding payouts.

Hoteliers have also complained that they were blindsided by arbitrary changes in fees, heavy discounts and hidden charges that only show up on the bill at the end of a financial period.

Frauds, Complaints & Legal Troubles

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The police came calling on the Oyo top brass for allegedly failing to pay about 35 lakh rupees (5 months’ worth of rent) to a hotelier in Bengaluru.

This website, called oyo-ruined-my-anniversary.com was created by a dissatisfied customer from Chennai to narrate his harrowing experience of booking a room with OYO.

Matters especially came to a head when a 15 year old national-level shooter was electrocuted to death in a hotel room, or when a rape complaint surfaced against one hotel staff member.

Backlash in the US & China

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Like in India, they faced severe backlash and protests from the American hotel owners as well.

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According to the Financial Times, 172 Chinese hoteliers have recently come together to write a letter alleging Oyo of “unclear bills and arbitrary deductions” and threatening legal action in the absence of prompt resolution.

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Massive Losses & Scrutiny by CCI

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While the company claimed to have seen a threefold jump in revenue in the financial year 2017–18, its net loss rose from 355 crores to 360 crores. In 2018–19, the company posted a similar value for its net loss, with its revenue reportedly rising nearly fivefold.

To add to the already mounting workload of Oyo’s legal team, it also found itself under scrutiny by the Competition Commission of India (CCI) this year.

Concerns Surrounding its Asset Heavy Model

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Thankfully, however, the young founder of this mammoth undertaking, has apparently sat up and taken notice of his plans going awry.

In November it announced that it was appointing Betsy Atkins, CEO and founder of Baja Corp., as an independent director on its board.

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Vinay Nair

Written by

Managing Partner at Nair Ventures | Venture Capital

The Startup

Medium's largest active publication, followed by +680K people. Follow to join our community.

Vinay Nair

Written by

Managing Partner at Nair Ventures | Venture Capital

The Startup

Medium's largest active publication, followed by +680K people. Follow to join our community.

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