Online travel agencies playing divide and rule tactics, says hotel body

The Federation of Hotel & Restaurant Associations of India (FHRAI) has issued a fresh notice to online travel agencies (OTAs) asking them to refrain from allegedly misleading its members into signing new individual contracts citing them to be renegotiated terms.

The apex hotels body said in its letter that after their earlier notice, OTAs – MakeMyTrip, GoIbibo and OYO - started reaching out individually to several hotels across cities. The member hotels are presented with a paper/ contract/ agreement of 20% or further reduced commission with a request to the hotel to stamp and sign or accept the document. The OTAs are telling the hotel members that the reduced commission is as per renegotiated terms with the FHRAI, the hotel body said.

Speaking with DNA Money, Gurbaxish Singh Kohli, vice president, FHRAI) and president - Hotel & Restaurant Association Western India (HRAWI), said that no OTA representative has yet met with the association's office bearers to discuss the matter.

"There is no question of renegotiated terms when no meeting with OTA representatives has taken place yet on this topic. By approaching the hotels individually, they are playing the divide and rule tactics. We've met them once and told them not to do such things and have a uniform structure akin to Booking.com and Yatra.com. However, the OTAs in discussion aren't open to this approach of working with the hotel members. They haven't got back to us yet and hence the fresh notice to bring them to the table, discuss and finalise mutually beneficial and uniform terms immediately," said Kohli.

When contacted, Deep Kalra, founder and chief executive officer, MakeMyTrip.com, said in an email response, "Two of my senior colleagues have in fact travelled specially to Mumbai to meet with Mr Kohli, hence surprised at their comment!."

An OYO spokesperson said, "We deny any rumour of OYO hotels 'negotiation' with any association, and we would like to deny it categorically. We have a strict compliance culture and operate under the laws of India as an Indian company operating in hotel leasing and franchising space and would like to re-clarify for the interest of our tens of millions of customers that we do not 'list' hotels. OYO hotels & homes only leases and franchises."

Further emphasising on the fact that no terms or commissions have been renegotiated with any of the OTAs/ aggregators, the apex body said it is determined to break the divisive business practice adopted by them. The FHRAI has asked hoteliers not to fall prey to such individual and customised terms, against uniform business ethics, for the bigger cause of hoteliers.

"We further state that these terms are neither discussed with nor ratified by FHRAI. We are proud of the hotels who have unanimously rejected their proposal and refused to accept or sign any such document produced. They are standing united with FHRAI by not buying into the OTAs' temporary promises," FHRAI said in a letter asking member hotels to stay together and not accept any customised terms.

The member hotels and hotel associations had approached the FHRAI to resolve the issue with MakeMyTrip, GoIbibo and OYO citing predatory pricing strategy being adopted by these OTAs. "All we want the OTAs to do is handle this situation and settle the matter amicably. That's what we have also said in the latter to the OTAs. All the hotels being approached have told the OTA representatives to discuss the matter with FHRAI and not give an individual, customised offers. We are keen to sit across the table and fix a structure that's beneficial to both the parties else it's not going to work," said Kohli.

In response, Kalra said, "Please understand that our contracts and commercial terms are with each hotel (or chain) directly and independently and hence we technically cannot discuss the same with any other party. We have communicated the same to FHRAI as well."

According to hotel industry players, if the OTAs are going around offering individual, customised contracts, then why can't they offer a uniform structure in consultation with the FHRAI. "I don't understand what's the problem with that. The OTAs claim they are not making money. They need to revisit their operating model and figure out how to make money without impacting member hotels' business," said a hotelier.

While predatory pricing and over-discounting are a few points of disagreement, hoteliers said that the most alarming issue is inclusion of illegal properties on their respective platforms. "We want such listings to be removed/ withdrawn with immediate effect. There's not going to be any bargaining on that front. It's a ticking time-bomb and will hurt the OTA platforms as well if left unaddressed," said Kohli.

On whether the issue with hotels in Ahmedabad has been resolved, Kohli said, "It hasn't been. There was a protest by the hoteliers for a couple of days, post which the OTAs met them and reduced the commissions to 20-22% levels. This is still not acceptable. While some have honoured OTA bookings others have delisted them."

However, Kalra had a completely different view on the issue. "After discussions and negotiations with hotels in Ahmedabad, virtually every hotel is working with us. Also, it's 'business as usual' in all other cities," he said in the email response.

Over the coming days, Kohli said, FHRAI office bearers will be holding a meeting or two among themselves. This will be to discuss the issue on hand and decide the plan of action on the same.

HOSPITALITY SPAT

• OTAs are presenting hotels with an agreement of 20% further reduced commission with a request to the hotel to stamp and sign or accept the document.
   
• The OTAs are telling the hotels that the reduced commission is as per renegotiated terms with the FHRAI, the hotel body said.