Ritesh Agarwal, founder and group CEO of Oyo, hit headlines when he decided to buy back shares from investors to double his holdings in the company to about 20 percent. Oyo is currently valued at $10 billion with Softbank as its biggest investor. But as Agarwal is busy taking the company global, Oyo is facing backlash from hotel owners in India.
The Federation of Hotel and Restaurant Associations of India (FHRAI), the hotel industry body, had moved competition watchdog CCI with a series of complaints ranging from skewed contracts, denial of markets and predatory pricing. The CCI has now launched a probe into the conduct of MakeMyTrip and Oyo, for potential violations of the Competition Act.
Speaking to CNBC-TV18, Agarwal talked about the backlash, plans for IPO and the future of Oyo. "In the last few years on an annual basis, Oyo has had 99 percent annual asset retention, which means 99 percent of asset owners who join our family stay with us a year later and one percent of them leave themselves or we ask them to leave because we have a 3C programme. Under the 3C programme, we decide whether an asset is good enough or not. So, first, this is a matter of credibility; our organisation is built with our underlying asset owners by data rather than just verbal perspectives," he noted.
Agarwal said the company constantly tries to get better for its asset owners. "A few months back, we launched the Oyo Open programme to listen to the feedback of asset owners and understand what needs to be improved. There are lots of very interesting videos, blogs, etc that asset owners have created about how they believe Oyo is increasingly becoming a stronger value proposition for them. We have enabled to disburse over Rs 100 crore in capex as well as interior design amounts for these assets to get better revenue pie. Majority of the people who are communicating or talking about the situations are folks who are not Oyo Hotel owners, some of them are actually asset owners who belong to some other brands and their intent is to try and create a price-fixing at a neighbourhood level, saying that at a neighbourhood level let Oyo also increase the price," he pointed out.
"Oyo was built with a principle of lowest prices. So, we will never agree to price-fixing and let the 25 percent price increase that some of them would like from us. We would like to deliver best prices at the right quality," Agarwal said.