Madras HC directs Oyo to respond in breach of contract case

The Madras High Court has directed Oyo Hotels & Homes to respond to a breach of contract case filed by Hotel Sakthi Park before its next hearing on August 12.

The hotel, which is located 100 km south of Chennai, had filed a case against Oyo in the Madras High Court on July 10 for non-payment of minimum guarantee. The case was filed under Section 9 of the Arbitration and Conciliation Act, 1996.

The hotel is now seeking relief and is requesting for a compensation of Rs 75 lakh from Oyo Hotels & Homes.

The company was in a contract with Oyo that guarantees a minimum income per month for three years. The hotel had also spent significantly in renovating the place, catering to Oyo’s standards in return for a minimum guarantee.

This is not the first time Oyo has been accused for breach of contract. Multiple hoteliers in cities like Bengaluru and New Delhi have also filed against Oyo in similar matters.

Founded in 2013 by Ritesh Agarwal, Oyo offers budget hotel rooms at a discounted price. The company then expanded into China, Europe, Southeast Asia and the United States, making Oyo one of the world’s biggest hospitality brands by room count. However, it has shrunk its footprint and headcount in Japan as bookings in the country plunged due to travel restrictions during the pandemic.

Oyo has furloughed further thousands of employees during the pandemic and has offered them stakes in the company to make up for a drop in pay.