Hospitality Sector’s Woes in India: Waiting to Check-In to a Safer Haven?

Most of us are familiar with Fab Hotels and a some of us would have also used their services as well. Fab Hotels, along with OYO, MMT-Go and Treebo Hotels are the major players when it comes to hospitality. However, Treebo Hotels is more known for its budget stays and lesser for its premium properties.

The Make My Trip and GoIbibo’s association, MMT-GO along with OYO is currently undergoing scrutiny from the Competition Commission of India (CCI). Does this mean a dark time for the hospitality sector? Will we expect the sector to get up from this and get into a top gear very soon? For that, we need to understand their current predicament and the depth of it.

Fab Hotels is a platform providing budget 3-star hotels across India. It is backed by Goldman Sachs and Accel Partners. There has been a repeat telecast of the Oyo story with the place of protagonist being taken by Fab Hotels, Economic Times has reported, where the hoteliers are accusing the brand for non-payment of dues, unfulfilled minimum guarantee amounts and termination of contracts. Fab Hotels has however denied these allegations, though there are various hotel owners who have filed cases against the hotel chain. The founder of FabHotels – Vaibhav Aggarwal had said that all the allegations are false, and they have no problems as such with any partner hotel. The revenue has also increased over 40% in the last quarter.

The secretary of Federation of Hotels and Restaurant Association of India (FHRAI) said that they shall be accumulating details in the issue from all the members across the country and will then call Fab Hotels for resolution of the issue. If the brand fails to provide an acceptable resolution for the case, FHRAI will be bound to take legal actions against them. FHRAI has earlier intervened in similar matters which involved Oyo and Go-MMT. And there also have been similar cases last year between various hotel owners and Oyo.

There are various hoteliers who are taking the matter legally against FabHotels as well as Oyo. All these allegations are seriously impacting the image of the brands which can hamper their business as well. Considering all the allegations against the brand, it looks like FabHotels can be the next Oyo in the Indian Hotel and Hospitality sector.

At Oyo Hotels, complaints also surfaced from ex-employees about the ‘toxic work’ culture which included being subject to pressure of acquiring new properties and also at times approving OYO properties which did not have air conditioning, or electricity, Inc42 reported. However, OYO submitted their clarification in this case as well stating that the complaints were put by only a small section of property owners.

On a parallel track, MMT-Go is also facing roadblocks due to the CCI enquiry against it which was made by the Federation of Hotels and Restaurant Association of India (FHRAI) that MMT and Oyo had been accused of charging high commission rates from their partner hotels and also for giving deep discounts on hotel bookings.

These proceedings have in general given birth to a dismal air in the hospitality sector which is still waiting for its chance to check-in to a safer haven.