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Oyo rubbishes reports of large-scale partner loss, and exiting businesses

Currently, Oyo largely operates under three models - franchisee, leased and owned assets. The rooms under the franchisee model accounts for the largest number of its inventory of nearly 3 lakh rooms in India

twitter-logoManu Kaushik | January 31, 2020 | Updated 20:38 IST
Oyo rubbishes reports of large-scale partner loss, and exiting businesses
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Over the past few months, the SoftBank-backed hotels chain Oyo Hotels and Homes has been making news of rising dissonance in its hotel partner network. Some reports suggest that the aggregator-turned-hotel-chain has witnessed over 500 hotels checking out its platform over growing differences in a bunch of areas. Rohit Kapoor, CEO (India and South Asia) at Oyo Hotels & Homes says that the number of partners who have left the platform, on a permanent basis, are 1 per cent (or less) of its total count. In India, it has nearly 20,000 hotel partners across different cities.

"On the partners' side while there's discussion around the issues that we have with our partners. On the long-term basis, the number of partners who leave us is 1 per cent. Last year, our partner base would have grown 30-40 per cent. I don't think we are exiting any business right now," says Kapoor reacting to the reports of start-up exiting verticals like weddings and merging co-living business (Oyo Life) with the flagship hotels (Oyo Rooms) segment.

Also Read: Oyo cuts staff strength by about 2,000, exits 200 cities as part of restructuring

Currently, Oyo largely operates under three models - franchisee, leased and owned assets. The rooms under the franchisee model accounts for the largest number of its inventory of nearly 3 lakh rooms in India. In this model, Oyo takes full inventory of rooms from the hotel owners, and generates demand for them. In some instances, partners have accused Oyo of following unfair business practices.

For example, in November, Bengaluru hotelier Betz Fernandez reportedly filed a cheating case against Oyo founder Ritesh Agarwal and six others for allegedly not paying rent for rooms for the five months. Some reports also say that the current restructuring process at Oyo - wherein it's laying off employees, and exiting nearly 200 cities - has got these partners worried.

"I want to isolate some of the issues because sometimes it's not fully understood. It is often about the customer service standards that we expect from partners. A large part of our partner base does a fantastic job of serving the customer. But a small part is not able to match up to the requirement. When that happens, we have to take them off the network till they make the correction and comeback. That's key to us. If we don't serve the customer well, that's not the business we want to be in," Kapoor says adding that he's personally meeting 2-3 partners every week.

For the past one year, the start-up has actively engaged in launching new programmes - OPEN and Sambandh - to stem the growing discontent in the partner community. It has recently opened its first partner support Center in Gurgaon (more to be opened in other cities) where partners can walk-in if they have any issues.

On the issue of regional-level employees being non-transparent to the partners, Kapoor says that it's an area of improvement. "There two factors to it. Is my (employee at the) last-mile understands the product that they are selling? Second is simplification at every level. But it's also not a usual case. The core (issue) is around both sides understanding what it takes to run the partnership because there are obligations on both sides. We are clear that we have to come together to resolve with the partner, and if they cannot, then that hotel should not be on the platform," he says.

Oyo says the reports of exiting business are totally out of place as the verticals where it operates have huge upside. "The weddings business has upside. The demographic trends in India are so favourable to that business, and there's no organised player of our size and scale. The co-living business is a strong growth area. Thirty-five million people move cities every year - either for first and second job or for studies. That's a large population which is not going to buy houses. Our job is to take care of partners and keep the equilibrium going... It is never perfect," says Kapoor.

Instead, as part of its recent restructuring exercise, the start-up has combined a few of its businesses into one leadership structure. For instance, its frontier businesses such as Oyo Townhouse, Collection O, Oyo Life and Oyo Home were separate verticals. These verticals have been combined in December, and brought under the leadership of Ankit Gupta, a former senior partner at McKinsey who joined Oyo in the same month.

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