At SoftBank’s Jewel in India: ‘Toxic’ Culture and Troubling Incidents
Oyo aims to be the world’s biggest hotel chain. But its growth was fueled by questionable practices, employees said.
An Oyo partner property in New Delhi. Oyo has ambitions to be the world’s largest hotel chain by 2023.
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Saumya Khandelwal for The New York Times
By Vindu Goel and Karan Deep Singh
But at least part of Oyo’s rise in India was built on practices that raise questions about the health of its business, according to financial filings, court documents and interviews with 20 current and former employees, as well as others familiar with the start-up’s operations. Many spoke on the condition of anonymity for fear of retaliation from the company.
Oyo offers rooms from unavailable hotels, such as those that have left its service, according to the company’s chief executive and nine of the current and former employees. That has the effect of inflating the number of rooms listed on Oyo’s site.
Thousands of the rooms are from unlicensed hotels and guesthouses, its executives have acknowledged. To deter trouble from the authorities over the illegal rooms, Oyo sometimes gives free lodging to the police and other officials, according to nine of the current and former employees and internal WhatsApp messages viewed by The New York Times.
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Oyo has also imposed extra fees on hotels and declined to pay the hotels the full amounts they claimed they were owed, according to interviews with hotel owners and employees, emails, legal complaints and other documents viewed by The Times. Some hotel operators have sought to file criminal complaints against Oyo, which said it withheld payments primarily over the hotels’ customer service issues.
“It’s a bubble that will burst,” said Saurabh Mukhopadhyay, a former Oyo operations manager in northern India who left the company in September.
Image
Saurabh Mukhopadhyay, a former operations manager for Oyo, said, “It’s a bubble that will burst.”
Credit...
Saumya Khandelwal for The New York Times
Oyo is part of a group of prominent start-ups that have sprinted to get as big as possible, fed by money from large investors such as the Japanese conglomerate SoftBank. Now some of those young companies — from the office rental company WeWork in New York to the delivery service Instacart in San Francisco — have started showing cracks in their businesses.
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Any fall by Oyo could blight India’s start-up landscape, which has received billions in foreign capital in recent years, spawning other multibillion-dollar companies such as the ride-hailing firm Ola and the digital payments provider Paytm.
It would also be another black eye for SoftBank, which is Oyo’s biggest investor and owns half the start-up’s stock. Masayoshi Son, SoftBank’s chief executive, has hailed Oyo as a jewel of his company’s $100 billion Vision Fund, even as he recently wrote off billions of dollars on other investments like WeWork.
“This is the only company which went global at this scale from India,” Satish Meena, a senior forecaster for the research firm Forrester in New Delhi, said of Oyo. “But as of now, there are serious doubts about the business model.”
SoftBank declined to comment.
Ritesh Agarwal, Oyo’s chief executive, acknowledged in a recent interview that some of his company’s room listings included hotels that it no longer worked with. He said Oyo left those listings up and marked them as “sold out” as it tried to woo the hotels back.
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Continue reading the main story
Aditya Ghosh, Oyo’s head of India operations, also said in an interview that many hotels lacked required licenses, leaving them vulnerable to the occasional government raid. He denied that Oyo gave free rooms to officials.
Oyo aims to be the world’s biggest hotel chain. But its growth was fueled by questionable practices, employees said.
An Oyo partner property in New Delhi. Oyo has ambitions to be the world’s largest hotel chain by 2023.
Credit...
Saumya Khandelwal for The New York Times
By Vindu Goel and Karan Deep Singh
- Jan. 2, 2020
But at least part of Oyo’s rise in India was built on practices that raise questions about the health of its business, according to financial filings, court documents and interviews with 20 current and former employees, as well as others familiar with the start-up’s operations. Many spoke on the condition of anonymity for fear of retaliation from the company.
Oyo offers rooms from unavailable hotels, such as those that have left its service, according to the company’s chief executive and nine of the current and former employees. That has the effect of inflating the number of rooms listed on Oyo’s site.
Thousands of the rooms are from unlicensed hotels and guesthouses, its executives have acknowledged. To deter trouble from the authorities over the illegal rooms, Oyo sometimes gives free lodging to the police and other officials, according to nine of the current and former employees and internal WhatsApp messages viewed by The New York Times.
ADVERTISEMENT
Continue reading the main story
Oyo has also imposed extra fees on hotels and declined to pay the hotels the full amounts they claimed they were owed, according to interviews with hotel owners and employees, emails, legal complaints and other documents viewed by The Times. Some hotel operators have sought to file criminal complaints against Oyo, which said it withheld payments primarily over the hotels’ customer service issues.
“It’s a bubble that will burst,” said Saurabh Mukhopadhyay, a former Oyo operations manager in northern India who left the company in September.
Image
Saurabh Mukhopadhyay, a former operations manager for Oyo, said, “It’s a bubble that will burst.”
Credit...
Saumya Khandelwal for The New York Times
Oyo is part of a group of prominent start-ups that have sprinted to get as big as possible, fed by money from large investors such as the Japanese conglomerate SoftBank. Now some of those young companies — from the office rental company WeWork in New York to the delivery service Instacart in San Francisco — have started showing cracks in their businesses.
ADVERTISEMENT
Continue reading the main story
Any fall by Oyo could blight India’s start-up landscape, which has received billions in foreign capital in recent years, spawning other multibillion-dollar companies such as the ride-hailing firm Ola and the digital payments provider Paytm.
It would also be another black eye for SoftBank, which is Oyo’s biggest investor and owns half the start-up’s stock. Masayoshi Son, SoftBank’s chief executive, has hailed Oyo as a jewel of his company’s $100 billion Vision Fund, even as he recently wrote off billions of dollars on other investments like WeWork.
“This is the only company which went global at this scale from India,” Satish Meena, a senior forecaster for the research firm Forrester in New Delhi, said of Oyo. “But as of now, there are serious doubts about the business model.”
SoftBank declined to comment.
Ritesh Agarwal, Oyo’s chief executive, acknowledged in a recent interview that some of his company’s room listings included hotels that it no longer worked with. He said Oyo left those listings up and marked them as “sold out” as it tried to woo the hotels back.
ADVERTISEMENT
Continue reading the main story
Aditya Ghosh, Oyo’s head of India operations, also said in an interview that many hotels lacked required licenses, leaving them vulnerable to the occasional government raid. He denied that Oyo gave free rooms to officials.
