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FHRAI requests Ministry to settle OTAs and hotels dispute

  • 31 December 2018

The Federation of Hotel & Restaurant Associations of India (FHRAI) has reached out to the Ministry of Tourism (MoT), Government of India (GoI) regarding the hotel industry’s on-going dispute with Go-Ibibo, Make My Trip (Go-MMT), and Oyo Rooms requesting its urgent intervention for redressal of hoteliers’ grievances. After a month of failed attempts to amicably resolve issues with the Online Travel Aggregators (OTAs), the apex hospitality body has written to the Minister of State for Tourism, KJ Alphons outlining the major issues of concern to the industry because of the OTAs’ unfair and arbitrary business practices. A number of FHRAI’s members are experiencing hardships due to the OTAs’ business ethics which are exploitative, unethical and divisive, leading to predatory pricing and other market distortions.

The letter to the Ministry states that the hotel industry in the country is going through a very challenging phase which is threatening the livelihood, business, investments and entrepreneurial initiative and spirits of the hospitality industry, and thereby eroding the viability of the sector.

Gurbaxish Singh Kohli, Vice President, FHRAI & President, Hotel and Restaurant Association of Western India (HRAWI) said, “The hotel industry, especially the budget and mid-market hotel segment is reeling under the adverse business tactics of the OTAs. The OTAs’ malpractices are affecting the hoteliers’ livelihood and business. These hoteliers who are part of the local and city hotel Associations across the country have approached FHRAI seeking consultation and support, and are in solidarity with the Federation. The FHRAI has tried to resolve the issue directly with the OTAs, however instead its CEO has chosen to dismiss FHRAI’s role in the matter. It leaves us with no choice but to ask for the Government to step in and create a norm for the OTAs just as the Commerce Ministry has done for the e-tailers recently.”

The FHRAI’s letter to the MoT summaries the most critical concerns of the hotel industry including the large scale breach of contracts, issue of predatory pricing, the demand for exorbitant commissions and the hosting of illegal and unlicensed Bed & Breakfast (B&B) accommodations.

SK Jaiswal, Vice President (North), FHRAI said, “One of the most glaring irregularities is the illegal and unlicensed B&B, motels or accommodations hosted by the OTAs on their platforms. More than 40 per cent of the room inventory available on the OTAs is illegally operated. OTAs are legitimising the unlicensed businesses by promoting them on their sites and apps whilst disrupting the business of the organised hotels. Since these operators do not have to pay for licences and the statutory fees, they are cheaper by default and also are a huge loss to the exchequer. Not only does this put legit hotels at disadvantage but such indiscriminate hosting encourages illegal activities too. Such non-compliance of statutory rules and regulations compromises guest safety and which should be big concern for everyone involved.”

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