Due to the coronavirus outbreak, and subsequent lockdown, Oyo Rooms has decided to stop all payments to their partner hotels.
Oyo is reportedly invoking ‘force majeure’ clause in the contracts, according to which the company can stop any or all payments due to any sudden natural cause.
In their response, Oyo Partners are claiming that ‘force majeure’ was never included in their contract. They have opposed this decision by Oyo Rooms.
Oyo Rooms To Hotels: Sorry, We Cant Pay You
Oyo Rooms has sent a letter to all hotel partners, wherein mainly two things have been shared:
They are invoking ‘force majeure’ clause to stop all payments to them
They will revoke all existing revenue sharing arrangement, and introduce a new model, wherein Oyo Rooms will deduce 10% from the net revenues generated from the accommodation, after reducting sales, marketing and customer acquisition costs. As of now, as per the contract, Oyo is supposed to pay a minimum payment to all hotels, irrespective of the actual number of bookings.
Hotel Partners Oppose This Move
Federation of Hotel and Restaurant Associations of India (FHRAI) has strongly objected to this decision by Oyo Rooms.As per the hotels, there is no ‘force majecure’ clause in their contracts, to begin with.
Gurbaxish Singh Kohli, vice president of industry body said, “We have reports that Oyo is now coercing hotels to agree and renegotiate to arbitrary and unreasonable terms by citing the pandemic and the ‘force majeure’ clause,”
He added that Oyo Rooms is claiming all media attention by announcing rooms and services for quarantined people, without consulting with the hotels.
And on the other hand, they are deducting the money as well.
Oyo Rooms founder Ritesh Agarwal yesterday announced that he will not take any salary for the rest of the year, even as executes and top management will experience severe deductions upto 50% of their salaries. They have already fired 5000 employees.