Oyo Gets Flak From Hospitality Industry Body After It Slaps Penalty Worth Crores, Cuts Ties Abruptly With Hotelier

 

The Federation of Hotel and Restaurant Associations of India (FHRAI) has come out in support of Chandigarh-based hotelier, Vikas Gupta who has lodged a first information report (FIR) against Ritesh Agarwal, founder of Oyo.

In the FIR, the hotelier has stated that the Oyo’s top management abruptly exited a business agreement with "criminal intent".

According to FHRAI close to 100 hoteliers have encountered similar conduct from Oyo as soon as the COVID-19 pandemic hit businesses.

“Disruptions caused by the pandemic have affected businesses everywhere, but Oyo now has resorted to manipulating agreements to coerce hoteliers out of it. It is evident in Vikas Gupta’s case Oyo could not keep its commitment in the agreement. So instead of trying to work a way out, it just tried to use brute force to abandon the hotelier. 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,” said Gurbaxish Singh Kohli, vice president of FHRAI and president, Hotel and Restaurant Association of Western India.

According to the Chandigarh-based hotelier, Oyo sent him a notice on March 16, to submit non objection certificate and other documents.

"With this notice, I was given just 15 days to comply, whereas according to the agreement the notice time to be provided is 60 days. I was told to submit the same documents which were submitted at the time of signing the agreement. Yet as a responsible venue partner, I resubmitted the documents within the  specified time period. After this, to my utter shock, 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 Dec 2020," said Gupta.

Oyo is already being investigated by Competition Commission of India (CCI) following complaints filed by FHRAI last year.

Following Covid19, Oyo is learnt to have invoked force majeure to renegotiate contracts with many hotels.

Sandip Ginodia , CEO

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