In the startup world, the word “disruption” is a panegyric.

It is a word that startups, big and small, like to use to describe themselves. Iconoclasts reshaping the world purely by the force of their will to fit their vision of how “things can be done better”.

Take OYO for example.

There is no doubt that OYO is a disruptive startup. 

OYO claims that it is currently the world’s third-largest hotel chain with nearly 1 million rooms under management – behind only marquee hospitality brands Marriott and Hilton. Ritesh Agarwal, the founder and CEO of OYO, claims that the company will surpass its competitors and emerge as the world’s largest hotel chain by 2023. If it continues to add 20,000 rooms to its kitty on a monthly basis—as it claims to currently be doing—, this could well be possible.

It would count as a big disruption if a startup from India came out of nowhere to become the world’s biggest hotel chain in just a few years.

Of course, this disruption hasn’t been without its fair share of controversies. Several folks including The Ken have called out several inconsistencies and issues with OYO’s model.

In a recent interview, Bejul Somaia, a partner at investor Lightspeed Ventures and the first institutional investor in OYO said, “Companies that have the disruptive tag by definition are somewhat controversial. That’s part and parcel when you’re trying to take on a large established industry and do things differently.”

Fair enough.

But here’s the catch. Among the folks who are calling out OYO are the owners of the very budget hotels that OYO is partnering with.

Over the past few months, several groups of hotel owners who are affiliated with OYO have protested against the company and have filed legal complaints. A hotel owner in Bengaluru has filed a police case against Agarwal, and the police have booked him for cheating and criminal breach of trust.

Other groups such as the Hotel and Restaurant Association of Western India (HRAWI), the Federation of Hotels and Restaurant Association of India (FHRAI), and the Budget Hotel Association of Mumbai have registered complaints and approached the regulator Competition Commission of India (CCI) for protection. 

OYO doesn’t invest any money into improving the hotel’s facilities. Instead, it requires the hotel owners to do so

Pradeep Shetty, a committee member of one of these bodies, has reportedly said, “Oyo has been cheating the hotel owners by using various gimmicks and arm-twisting tactics which has resulted in huge losses for hotel owners and has disrupted the hotel industry and market”.

AUTHOR

Sumanth Raghavendra

Sumanth is a serial entrepreneur with more than eighteen years experience in running startups. He is currently the founder of Deck App Technologies, a Bangalore-based startup attempting to re-imagine productivity software for the Post-PC era. Sumanth’s columns appear regularly in leading publications. He holds MBA degrees from the Indian Institute of Management, Bangalore and Thunderbird, The American Graduate School of International Management, USA.

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