Corporates cut back on business with Oyo because of service, quality issues

Owing to multiple issues hovering around Oyo Hotels & Homes ranging from safety and security of women to service and quality issues, several companies including L&T Infotech, Vodafone Idea, TCS and others have cut back on their business with Softb...

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New Delhi: L&T Infotech, Vodafone Idea, Tata Consultancy Services and several other companies have cut back on their business with SoftBank-backed Oyo Hotels & Homes for employee accommodation, people familiar with the matter at the hospitality firm, some of its former employees and hotel partners said.

These sources cited multiple issues ranging from safety and security of women to service and quality issues for these companies to scale down the business.

As a result, as well as disputes with hotel partners and frequent changes in teams, Oyo’s corporate business has stayed flat over the past one year, people familiar with matters at the company said. Oyo’s offline business, which includes the corporate segment, contributes about 18% to its total revenue, they said.


“There are a lot of issues and right now Oyo is not in a position where it can manage these issues. Corporates have cut back on business,” a former employee familiar with matters said. “Our corporate business stayed flat last year. There wasn’t any growth and to maintain the same levels it was very hard for us to retain corporate clients.”

Another person said the company’s business fell in the peak period in 2019 compared with a year earlier.

An Oyo spokesperson, in response to ET’s queries, however, said in the last 12 months, this business had grown 80% in revenue from a year earlier. The spokesperson also said the company had several tools in place to address customer concerns over services and safety.
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In December, L&T Infotech had snapped ties with Oyo due to an incident in Pune, which in its view “compromised” the safety and security of its female employees.

In an email to Oyo, which ET has seen, L&T Infotech stated: "Over the last couple of weeks we have been getting a lot of complaints specially (from) female employees about them not being safe at Oyo hotels. We have had two such incidents in Pune which have led us to question employee safety … We as a company are liable for their safety and wellbeing when they are away for work … keeping this mind we will discontinue services to Oyo pan India in lieu of our employees’ safety and wellbeing.”

In another email seen by ET, L&T Infotech wrote: "Though the incidents happened in Pune, and pertain to one particular hotel, Oyo has not done any due diligence from their end to ensure such incidents are not repeated.”

L&T Infotech did not respond to requests for comment.
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Companies like TCS and Vodafone also cut back on business amid service issues, while others like Britannia raised quality concerns.

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“Vodafone’s corporate business for its networking division for employee accommodation to Oyo fell from about Rs 25 lakh in October to about Rs 11 lakh this month. This month started at about Rs 17 lakh but then a cancellation came for Rs 8 lakh due to service issues and since then they have not added anything,” a source familiar with matters said.

Vodafone, TCS and Britannia did not respond to ET’s queries till press time Monday.

"Britannia and Vodafone employees were facing a lot of service issues. Clients were not aware of what they were getting. Up until two weeks ago, one corporate on the ground was handled by at least 5-6 people in the sales team. If there are multiple people from the same company asking for business and quoting different rates, naturally, corporate clients will get upset. Transparency was missing,” a source familiar with matters said.

An internal email at Oyo accessed by ET shows an employee from a professional services firm had registered a complaint with Oyo about a woman staff member facing security issues at one of the hotels. The complaint said she had to lock herself in the washroom and had to call the police after midnight, as a few drunk men tried to open the door of her room and abused her. The door did not have an inside latch, the complaint alleged.

"As scared as I was, I locked myself in the washroom and called the police…the cops came to the property and arrested one of those men,” the woman stated in her complaint and added that she was transferred to another Oyo Townhouse property by Oyo and that she did not follow up with the police personnel after that since she was more worried about getting to a safer location.

The professional services firm did not respond to ET’s request for comment.

Responding to ET’s queries, the Oyo spokesperson said: "In case of any issues, there are a host of measures undertaken and tools accessible to guests and staff to improve and support the resolution of any customer experience concerns. We have undertaken several initiatives and a series of safety measures to strengthen our guest experiences. These include an escalation matrix, in-app SOS button on check-in to intimate Oyo Safety Response Team or the Police about any emergency, in-person on-ground assistance and CCTV surveillance and security in all required areas, among other things."

An Oyo hotel partner said the company’s corporate business had been hit as it had heavily cut down room rates on business hotels without asking the partners, who were now denying check-ins to corporate clients. “Oyo owes me Rs 8 lakh for one hotel and Rs 3 lakh for another hotel. Oyo expects me to give services for Rs 600-700 for a business hotel room which should command at least Rs 2,500," this person said.
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