In a latest development, the Hotel Owners’ Association (HOA) of Mysuru has decided that after 15th of the month, 400 of its hotel members will block their inventory to GoIbibo and MakeMyTrip (Go-MMT) unless the OTAs agree to the terms put forth by the Association.
Since December of 2018, several hotels across the country have voiced concerns and in some cases stopped conducting business with the erring Online Travel Aggregators (OTAs) and Oyo. The Association had recently convened a meeting of its members in the city to regulate terms of operation with the OTAs and hotel aggregators, to put an end to exorbitant commissioning and deep discounting tactics. Last month, hotels in Sikkim under the Sikkim Hotels & Restaurants Association (SHRA) terminated their contracts with Go-MMT after the OTAs did not meet the terms outlined by the Association.
“The OTAs and Oyo are destroying the very fabric of hospitality under the guise of disruption. They are literally bullying hoteliers, flexing their muscles with seemingly unlimited funds, access to technology and consumer data. Hotels took their bait of increased revenues and rates which today has given them a free hand at employing predatory pricing policies. The indiscriminate discounts offered to customers, outlandish commissions and Performance Linked Bonuses (PLBs) demanded from hotels, hijacking their online and offline brand and business resources, misrepresenting the actual rate received from guests, pitting one hotel against another and other below the belt tactics have left many hoteliers desolate,” says Sooryah P, President, Association of Indian Hotels and Serviced Apartments, Bangalore.
Hotels have alleged that the OTAs as well as Oyo have no regard for a hotel’s operations, outgoing costs and sustenance. The OHA has stated that the OTAs do not factor in the high operating costs, labour issues, Government compliances, and escalations among other regulatory and policy concerns while imposing low cost tariffs on a hotel. This has put many hotels in a tight spot with little to gain and more to lose from the arrangement.
“In our recent meeting, hotels in Mysuru have made three major demands that include reducing the commission to 15 per cent for Pay at Hotel (PAH) bookings and 18 per cent for prepaid bookings, discontinuation of PLB or any such similar scheme which effectively translates to increased commissions and discounting, if any shall only be offered by the hotels and not OTAs. Failing to meet these demands, post the 15th of Feb, hotels will block the inventory to those OTAs,” says Narayan Gowda , President, HOA, Mysuru.
The Federation of Hotel & Restaurant Associations of India (FHRAI) has supported the decision made by HOA and has reminded Go-MMT and Oyo of the forewarned consequence of not amicably resolving the dispute.
“We are in solidarity with HOA and we don’t see any reason why any hotel should continue conducting business with these OTAs and Oyo. They are monopolizing, they resort to arm twisting, they misuse customer database of hotels and have neither care nor concern for a hotel’s well-being. Finally, the hotels have seen through the divisive practices of these OTAs to grow at the expense of the local hotels,” says Gurbaxish Singh Kohli, Vice President, FHRAI & President, Hotel and Restaurant Association of Western India (HRAWI).
“The OTAs must operate in harmony with all other stake holders in this space and not use muscle power to threaten the very existence of small hotels for the sake of their valuation and business plans. Good corporate governance demands that the OTAs and Oyo follow fair trade practices in the true spirit and not hurt the hotels who they term as partners,” concludes Pradeep Shetty, Jt. Hony Secretary, FHRAI.
About Federation of Hotel & Restaurant Associations of India (FHRAI)
The Federation of Hotel & Restaurant Associations of India (FHRAI) is the apex body of the Indian Hospitality industry. Founded in 1955, the association has diligently built on its rich legacy and is today privileged to serve as the leading voice of our industry and plays a seminal role in supporting the growth trajectory of India’s hospitality and tourism sector. FHRAI provides a vibrant interface between the industry, government, regulatory bodies, academia, international organizations, civil society and the media.
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