The Federation of Hotel & Restaurant Associations of India (FHRAI) has now warned of action against room aggregator OYO for large-scale breach of contracts, jeopardising the safety of consumers and violation of laws. The move comes a week after the apex body issued a notice to online travel aggregators (OTAs) - MakeMyTrip and Goibibo - for amicably solving pricing related issues with its member hotels/ associations.

In its letter on Monday, FHRAI told OYO that it is endorsing illegal and unlicensed bed and breakfast (B&B) apartments, flats in residential and commercial buildings, rooms in chawls and such other independent structures as hotels.

Gurbaxish Singh Kohli, vice president – FHRAI and president – Hotel and Restaurant Association of Western India (HRAWI), said, such positioning of hotels is tantamount to misleading the guests. "When a guest books in a hotel they expect to stay in a hotel and not in an apartment or a residential premise. This not only harms the reputation of hotels in India but also constitutes a potential safety hazard for the guest," he said.

The federation said that it is a matter of fact that OYO rooms entered into contracts with a number of hotels for the sake of loading inventory or for an exhibition of numbers.

"Unfortunately, it is reported that you have been reneging on all your obligations and in fact adopting exploitative and coercive methods against hotels who have protested. Unfair and arbitrary revisions of commission rates, threatening legal notices, levying of convenience charges, obtaining hotel client database and approaching them directly, unfair levy of audit denial charges, stopping of minimum guarantee amounts or abysmal drop of room rates in such cases, issues with OYO money, lack of transparency and internal resolution mechanism to deal with all issues of hotels, inconsistent and variable rates of commissions across the board and unfair levy of room deviation charges, among others are some of the problem areas that are required to be addressed. Although these pertain to breach of contracts between parties, the sheer number of such grievances from hotels is a matter of concern," it said in the letter.

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