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The tragedy of OYO’s hotel partners

Hotel owners across India have had enough of OYO’s bait-and-switch tactic. They are mobilizing to take the company to task.

The man is a part lament, part frayed nerves.

At the other end of the phone, his voice is measured. He says he wants to tell his story but doesn’t want to invite trouble. OYO has already put him through a lot, and he is hoping for some resolution soon. “I can tell you what happened, but don’t use my name,” he says.

The man is the owner of a small budget hotel in Pune. An elderly gentleman, 62 years old, he thought it’d be nice to have a stable, decent income as he nears retirement, and when an OYO representative reached out to him with a get-rich-quick offer, he jumped at it.

The man owned a residential building, five floors comprising 17 two-bedroom apartments. The OYO representative offered that if the building is converted into a commercial property, a hotel, the man could stand to make a handsome return. The terms were congenial. OYO would pay the man Rs 6.25 lakh ($8,800) per month, a minimum guarantee. Over and above the minimum guarantee, whatever money OYO makes from the hotel would be split between the partners; OYO would pocket 90% and the owner, 10%.

Six months later, OYO pulled the rug out from under his feet, and cut the minimum guarantee by 48%.

What’s happening across India with OYO’s hotel partners is a bait-and-switch act that is all too familiar. First, attract partners with ludicrous incentives, like moths to a flame. Second, encourage partners to invest in the trade by taking on debt, with the promise of making more money. Third, berate oversupply, and crib about not enough demand. Four, bring down artificially high incentives. Five, leave partners stranded. Rinse, repeat.

Now, the hotel owners are trying to fight back.

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llustrations by Swati Addanki.

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