OYO defers the contract of fixed income guarantee to hotel partners as COVID-19 stresses revenues

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OYO has also sent emails to hotel owners regarding this. In this mail OYO has stated that they are going to set up a new contract on a revenue share basis, thereby removing fixed pay-outs that were earlier agreed on. Many townhouse property owners said that they have received an invitation regarding this new contract. Based on this new contract if a hotel is doing good business, they will get good payment but if the hotel is not doing a good business, then the payment given to them by OYO will also be little.

Many hotel owners also co-own townhouse hotels with OYO. The townhouse was launched in 2017 which was positioned as a mid-market boutique hotel brand, the townhouse operated in 19 cities on a franchise format. These premium properties have very high occupancy rates and it fetches almost 15 percent of monthly revenue for OYO. Most of these owners have now stopped receiving the minimum fixed pay-outs since March from OYO. This has left the owners with no income and they are facing a difficult time because of this.

As per the previous agreement between Oyo and townhouse property owners, OYO had agreed to source regular bookings and consequently take care of online promotions for getting bookings. But with Oyo choosing to suspend fixed payments to owners, the owners are forced to choose between taking legal actions against OYO or agreeing to the new contract. The townhouse co-owners said that they had agreed to the previous contract as the fixed payment seemed much better than any other option available in the market. Many property owners are now moving to court against OYO as they failed to come to a settlement via the arbitration route. Many other property owners are selling off their properties to recover the cost they have incurred for the property. While others canceled their contract with OYO and are planning to move to work with a rival online hotel aggregator of OYO.

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