- The New York Times looks at the malpractices and toxic culture of OYO Rooms in India & abroad through this news report which exposes the reality.
Oyo, a start-up offering budget hotel rooms, has grown into one of India’s most valuable private businesses and aims to be the largest hotel chain in the world by 2023.
Yet, according to financial filings, court documents and interviews with 20 current and former employees, as well as others familiar with the start-up’s operations, at least part of Oyo’s growth in India was focused on activities that raise questions about the health of its company. Some thought about the condition of anonymity for fear of the company’s retaliation.
Here are few findings from the report on these malpractices of OYO by The New York Times-
- Oyo offers rooms from inaccessible hotels, such as those that have left their service, according to the organization’s chief executive and nine of the current and former employees. This inflates the number of rooms on the Oyo site. This is one of the malpractices inside OYO Rooms.
- According to interviews with hotel owners and staff, emails, legal reports and other records examined by The Times, Oyo also levied additional fees on hotels and refused to pay the hotels the full amount they claimed to have been owed. Some hotel operators have tried to file criminal complaints against Oyo, alleging that they have withheld payments mainly on the customer service issues of the hotels.
“It’s a bubble that will burst,” said Saurabh Mukhopadhyay, a former Oyo operations manager in northern India who left the company in September..
- In a recent interview, Ritesh Agarwal, chief executive of Oyo, admitted that some of the room listings of his company included hotels with which he no longer worked. He said Oyo left the listings and labeled them as “sold out” as the hotels were being wooed again.
- As acknowledged by their owners, hundreds of rooms come from unlicensed hotels and guesthouses. According to nine of the current and former employees and internal WhatsApp messages seen by The New York Times, Oyo also provides the police and other officials with free accommodation to keep the authorities from having trouble over the illegal rooms.
- Oyo managers also gave free rooms to the police and other government officials on request to placate the authorities over unlicensed properties, said current and former employees. They said the details in dedicated WhatsApp groups were recorded, one of which was reviewed by The Times.
Founded in 2013 by Mr. Agarwal, then a 19-year-old student, Oyo set out to organize budget hotels in India that were historically small, family-run businesses. The business coaxes hotels into Oyo-branded destinations marketed exclusively through its website; it then markets these rooms online to travelers and takes a cut from each stay. There are also some hotels operated by the start-up itself.
Oyo is trying to expand internationally and now has more than 1.2 million rooms available in 80 countries, including the United States. It employs over 20,000 employees and has received funds in excess of $2.5 billion. Mr. Agarwal became a business star with India’s prime minister, Narendra Modi, hobnobbing.
Yet Oyo’s losses have mushroomed as it has expanded. According to recent government filings, the organization expects to lose money by at least 2021. Many efforts to expand have flopped in countries such as Japan.
You can find the whole report here.
