Why Thousands of Guests and Hotels Are Boycotting OYO Rooms

What happens when a startup grows too big, too fast? OYO has only been around about seven years, but in that span of time they have managed to list over 23,000 hotels in more than 800 cities across 18 countries in the world. This SoftBank-backed startup is among the most valued unicorns in the country and aims to be the world’s largest hotel chain by 2023. In spite of all this, OYO has faced a string of controversies over the course of the last two years, culminating in an exposé written by The New York Times on January 2nd of 2020. In this video, we will explore this report in order to extrapolate where OYO has gone wrong, and what they can do about it.

The New York Times article: https://www.nytimes.com/2020/01/02/te...

Founded by Ritesh Agarwal in 2012, OYO actually started as an Airbnb-style homestay service called Oravel. As Ritesh Agarwal backpacked across India while building his Oravel, he soon discovered a huge opportunity in India’s unorganized hotel industry. Although there was no lack of hotels in the country, Ritesh Agarwal found it challenging to find budget hotels that offered basic cleanliness and amenities. This drove Ritesh Agarwal to leverage the already established hotels in the country and started to bring them under his new brand which he was now calling OYO. With the money from Thiel Fellowship and experience from a three-month accelerator program in Mumbai, Ritesh Agarwal started off by onboarding his first hotel in 2013. In 2016, OYO took the decision of going international. Here we are after six years of OYO and this Gurugram-based hospitality startup continues to expand and grow across the world. However, the story doesn’t end here. As OYO continued with its unprecedented growth, there were reports of alleged rape by OYO’s hotel manager, and a boy getting electrocuted while taking bath in an OYO hotel.

The New York Times report implies that unethical practices and toxic culture have been an unfortunate but integral part of OYOs momentous rise. Firstly, OYO’s founder and CEO Ritesh Agarwal acknowledged that they have listed rooms from hotels that have stopped working with the company. While these hotels were listed as SOLD OUT, it created a false impression of popularity and boosted the number of rooms across the OYO network. Next, we have Saurabh Mukhopadhyay, a former operations manager who left OYO back in September, who claimed that the company requested its employees to list unavailable properties, along with fake photographs of the rooms, in order to impress investors. The report also said that OYO intentionally withheld payments from hotels in a bid to squeeze the hotel owners to get more profitable contracts. Betz Fernandez, a hotel owner in Bangalore claims that OYO owes him $49,000. The report goes on to talk about a woman who got raped by three men in her room at an OYO hotel in Noida. Recently, a new controversy has cropped up: the OYO layoffs. The OYO layoffs, which began in 2020, have resulted in over 2,400 jobless Indians. These 2020 OYO layoffs have painted the startup in an even more negative light.

In their response to the New York Times report, OYO said: We are committed to growing OYO the right way — by meeting the needs of property owners and of the guests we serve together. We work hard every day to ensure that our values are upheld by thousands of committed employees around the world, and we are subject to regular external audits to ensure proper compliance and adherence to our Code of Conduct. With regards to complaints of a small section of property owners in India whose payments are disputed, multiple escalation mechanisms exist and we continue to provide resolution. We are also investing in technology and in building stronger partner support teams to ensure reconciliations happen faster. We expect all hotel owners to partner in delivering superior guest experience. We will also continue to utilize the provisions in our contracts that allow us to incentivise and recognise thousands of owners who consistently deliver a high-quality guest experience.

Indian unicorns like OYO, Flipkart, Ola, and Paytm are the torchbearers of India's startup ecosystem. They represent the growth potential and show the world that Indian startups have the capability to go global. This latest controversy doesn’t just paint OYO in a bad light but also raises questions about the entire ethos of Indian startups and entrepreneurs. As SoftBank, which is OYO’s biggest shareholder, starts to get more cautious, we can expect a similar approach from other foreign investors in India. This is a lesson for Indian startups and entrepreneurs who are chasing growth and revenues. It is important to scale your business in a sustainable manner while moving towards profitability rather than an unsustainable growth aimed at growing revenues.

#OYO #oyorooms #riteshagarwal