Earlier this week, India’s anti-trust regulator Competition Commission of India (CCI) dismissed complaints by the Federation of Hotel and Restaurant Associations of India (FHRAI) that Oyo Hotels and Homes, one of the world's largest hotel chains, was misusing its dominance, endorsing the company’s contention that it was a hotel chain and not an online travel agency.
The CCI ruled that Oyo is not in a dominant position and does not engage in price parity, predatory pricing, charging of commissions, misrepresentation of information and hotel service fee levies. The regulator also observed that Oyo is not charging exorbitant commissions from hotels that are a part of its chain.
In an exclusive interview with CNBC-TV18, Oyo’s South Asia CEO Aditya Ghosh welcomed the order that recognises the company as a hotel chain as opposed to an online travel agency.
Ghosh stressed that there is no consistent standard in the economy segment of the hotel industry and the customers are charged anything depending on how desperate they are for a particular room. “We are making it standardised, we are making it more accessible, we are making it affordable and in that there will be a few miniscule part of this industry which will get affected, vested interests will get affected and in the interest of the consumer that is a battle we are willing to fight,” he stated categorically.
Edited excerpts from the interview.
It is a fairly comprehensive order that the CCI has put out on this matter. The CCI does not rule Oyo to be in a dominant position unlike MakeMyTrip which has a dominant position. However, in Oyo's case you have a significant position especially in the market for franchising services for budget hotels. Let us talk specifically about what is under investigation and the charge that the commercial arrangement between MakeMyTrip and Oyo has forced Fab and Treebo off the platform. This is the matter under investigation. In your statement you say that you will cooperate. Take me through what you make of this?
There were various things alleged in the complaint. This is actually the second time -- once in July and now again that the CCI has ruled that Oyo is not in a dominant position or there is no abuse of power or anything of that sort. Since this is a complex commercial arrangement there are various parties involved. What the CCI has said is that it wants to go and investigate the agreement between MakeMyTrip and Oyo, which is absolutely fine. It gives us another opportunity to go out there and explain that this is how the whole thing works.
However, what is important for us to point out is that we are not under any exclusive arrangement with MakeMyTrip. We actually use various other booking platforms whether it is Booking.com or MakeMyTrip or Airbnb; so for us it is actually a great opportunity to once again go and explain what we do.
The other significant thing that we are very happy about in the order is that it once again clearly establishes and recognises Oyo as a hotel chain as opposed to an online travel agency which is the other confusion that is often there in the market. So I am actually very happy with the order.
There have been concerns, we have seen this play out between restaurants and players like Zomato and now it seems to be playing out in the hotel business with various associations lining up and saying that there is visibility fee, you have hiked your platform fee and so on and so forth and you are driving down prices. I know that on predatory pricing there is no adverse comment that has come in the CCI order against Oyo specifically but how do you react to the charges that are being made by hotel associations from across the country?
There are two things - one is that the CCI has said they do not find any predatory pricing which we always knew but it is good to get that validation. The second thing is that most of these hotel associations and many of these hoteliers that are part of these hotel associations, many of them are actually not even Oyo franchises. So, that kind of puts into question what is their motivation in coming up with these complaints and these public statements when most of them are not even our franchises. They are franchises of other hotel companies.
Having said that, the way I kind of think about it is, this is part of how an industry changes. I have seen this over the last 20 years; when direct-to-home or cable television came in many of these cable suppliers and cable networks, local cable networks had a problem with a new guy coming in and making that access much more affordable for everyone. The same thing happened with the automotive industry when small cars came in and they dropped the prices and made it more accessible. Same thing happened with retail chains and we are part of that. What are we trying to do? We are trying to step back and say this industry, at least the economy segment, is very broken, there is no consistent standard and you are being charged anything depending on how desperate you are for that room. We are making it standardised, we are making it more accessible, we are making it affordable and in that there will be a few miniscule part of this industry which will get affected, vested interests will get affected and in the interest of the consumer that is a battle we are willing to fight.
Let us address this in the context of what we have just seen happen with Zomato for instance and I am using that as an example where we saw this log out campaign. Can you give me some sense of how many hotels for instance have logged out of the Oyo network for whatever issues they may have had in the last few months? What is the percentage of the number of hotels that may have opted out of the network?
Less than 1 percent. Even our annual - we call it churn, even our annual churn is around 1 percent. Having said that that is a statistic that is in our favour but I kind of look at it this way saying that there is a chance for us to go and explain to people why are we doing what we are doing and why this is important for the consumer and for the industry.
What is very different about us from some of the other players you mentioned is, we are not a marketplace, we are not connecting consumers to a hotel. We are the hotel, we determine the price, we determine the customer experience and so that makes us fundamentally different.One of the things that was alleged in that complaint was we are involved in deep discounts. For us there is no question of a discount, it is the price that we offer and of course it is dynamic pricing so when there is low demand the price will come down and when there is high demand the price will go up but that is like any other network industry.