In the letter in which he invokes marjeure violence, Oyo also proposed new revenue-sharing models that would replace existing agreements. Under the new agreement, Oyo deducts 10% of a hotel`s net sales, in addition to sales and marketing costs, pipeline fees and customer acquisition costs, as shown in the ET report. Federation of Hotel – Restaurant Associations of India (FHRAI) said it had received complaints from hotel owners about the letter. Oyo, backed by SoftBank, invoked the force majeure clause in its agreements with hotel owners because the COVID-19 pandemic has had an impact on the sector, reports the Economic Times. This allows oyo to effectively suspend minimum guarantee payments to hotels. Under the minimum guarantee model, hotel owners must receive a minimum amount, regardless of the volume of turnover. But many angry hotel owners said the clause was never included in the original agreements, as the ET report indicates. We sought Oyo`s opinion, a copy of the letter and the new agreements. For example, Akash Nangia, a hotelier based in Goa, transferred a local court after no agreement with Oyo on the new conditions. Many townhouse homeowners, who cannot afford to go to court, have chosen to sell the real estate or go to other hotel aggregators and managed rental platforms. The Softbank-backed start-up has terminated, in accordance with the emails sent by Oyo to hoteliers, minimum agreements on the operating guarantee (MGB), a fixed amount to be paid monthly to property owners. Instead, it proposed new conditions and asked them to introduce a revenue-sharing model, said at least six Oyo Townhouse owners.
Townhouse is positioned as a “mid-market brand boutique” and the 250 hotel properties in 19 cities are in common with Oyo and act as franchises. BENGALURU: Hospitality Einhorn Oyo has suspended contracts with more than 250 hotel owners for its “Townhouse” properties across India as it tries to renegotiate firm payment agreements after its revenues took a hit due to the national blockade, said two people who request anonymity. In accordance with the previous agreement, Oyo had agreed to make regular bookings and take care of online actions. But because Oyo chooses to suspend firm payments, the owners are obliged to either appeal or accept the new conditions. Townhouse co-owners stated that they had opted for a partnership with Oyo, as MBG`s fixed payments are more attractive than other alternatives on the market. Typically, the owners of Townhouse had entered into a 5 to 7 year contract in which Oyo would take over and renovate the property. Contracts were frozen for 2 to 3 years. In accordance with the previous agreement between Oyo and Townhouse property owners, the startup had agreed to obtain regular reservations and, therefore, handle online promotions for the property. But since Oyo chooses to suspend firm payments to the owners, the owner is obliged to decide whether to deal with the new conditions or accept.