OYO Rooms: What's up with the Unicorn?

Reportedly, more than 500 hotels have exited Oyo since April 2019. Also, the financial loss for the unicorn in FY19 increased 6 times! What’s up with Oyo?

Read and find out below

A better businessman is one who possesses more bargaining power than others. That’s because business is all about making use of the right opportunities at the right time in the best possible way. But, the other side of this is sustainability, which is much harder to attain these days. As in the words of Mia Hamm “It is more difficult to stay on top than to get there.”

Oyo is probably facing a sustainability issue these days. We’re not saying this, but the facts likely are. Hundreds of hotels located in different cities snapping their contracts with Oyo in a span of just a few months, and then the recent news of mounting financial losses. This is hinting towards a crisis situation for the unicorn that was uncalled for.

FHRAI Attestation

Federation of Hotel and Restaurant Associations in India (FHRAI) has received numerous complaints in the past few months against Oyo and also, some small local hotels have staged protests against the hospitality company, according to FHRAI’s Honorary Secretary. Though, Oyo has denied this and said that the figures are ‘exaggerated’.

If some other source had reported this, we wouldn’t have taken it seriously but since it’s FHRAI, it’s probably the most authentic information possible. By the way, the FHRAI has forwarded the matter to the Competition Commission of India (CCI).

What are the allegations about?

This is one part of the story which won’t help in getting to a conclusion (unless you’re biased against Oyo) but here’s how it is. Hotels in large numbers have complained that Oyo has violated contracts many times besides delaying payout and charging arbitrary commissions.

This is coming from those who weren’t known to exist at one point in time. We’re not saying that they are wrongly imposing allegations or they don’t have the right to oppose. But, it’s also a fact that these hotels would probably have been in an identity crisis if Oyo had not started to their rescue. But, who is right and who is wrong, would be hard to predict at this time.

What can you expect?

With losses increasing multiple folds and hotel snapping contracts, one obvious impact would be on the listing of the company. So, it’s more than likely that the IPO of Oyo would be delayed. Oyo is a startup whose success story is an inspiration for other startups in India. But, this speed-breaker in its journey will put a halt on its future dreams to a certain extent. But, to what extent? We’ll have to wait and watch.

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