News Contact Us

Oyo suspends MGB contracts for property owners due to reduced revenues

Author : Pankaj Singh | Published Date : 2020-07-01 

The adverse impact of COVID-19 pandemic is becoming more and more evident across the world. It is being speculated that  nothing of this magnitude has been observed for more than 100 years since the 1918 Spanish Flu pandemic. Till now, over ten million people have been infected in over 200 nations with half a million deaths. The hospitality industry is among the worst hit due to lockdowns measures and travel bans.

Consequently, travel and hospitality companies are facing huge financial difficulties and are taking proactive steps to keep their businesses going. A similar incident apparently took place recently when Indian hospitality giant Oyo Rooms suspended contracts with over 250 hotel owners across India.

According to sources familiar with the knowledge of the matter, the company is planning to renegotiate MGB agreements after recording significant revenue drop due to nationwide lockdown. The hospitality giant has suspended MGB (Minimum Business Guarantee) agreements, a fixed amount to be paid to hotel owners monthly.

As per Oyo Townhouse property owners, Oyo has come up with new revenue-based share contracts, invalidating fixed payments that were previously agreed on. Reportedly, around 250 property owners co-own Townhouse hotels in a partnership with Oyo. Introduced in 2017, the Townhouse was established as a ‘mid-market boutique hotel brand’ that functioned on a franchise format across 19 cities.

As per the previous agreement between Townhouse property owners and Oyo, the startup had agreed to source online bookings and take care of online promotions for the property. All property owners are now forced to choose between agreeing to new terms or taking legal action.

Oyo said in the statement that as COVID-19 pandemic has impacted several industries and led companies worldwide to reconsider the terms of their contract; the company has also invoked related sections of its present contracts to move to a sustainable model of operations.

Meanwhile, property owners said that they had collaborated with Oyo as the fixed MBG payments seemed more lucrative than alternative options in the market.

Source Credit - https://www.livemint.com/companies/news/oyo-suspends-fixed-income-guarantees-to-hotel-partners-as-covid-19-wipes-out-revenues-11593434919848.html

About Author

Pankaj Singh

Pankaj Singh

Endowed with a post graduate degree in management and finance, Pankaj Singh has been a part of the online content domain for quite a while. Having worked previously as a U.K. insurance underwriter for two years, he now writes articles for fractovia.org and other online portals. He can be contacted at- [email protected] | https://twitter.com/PankajSingh2605

Related News

ABCorp to Launch EGA Manufacturing With HP Multi Jet Fusion Technology

Published Date: 2021-01-15         Author: Pankaj Singh

ABCorp (American Banknote Corporation), one of the leading manufacturing service providers in the United States., has recently declared the expansion of their Center of Excellence. The opening of the company’s new Additive Manufacturing Center at the site compliments the offering of highly bes... Read More

Binomo launches an online trading platform to garner better profits

Published Date: 2021-01-13         Author: Pankaj Singh

According to reliable sources, Binomo, a client-oriented trading company, has recently launched a safe online trading platform to generate more profits. The platform is designed to assist in real-time market analysis and its primary target audience includes individuals that are inclined towards enha... Read More

Infosys to boost digital transformation by introducing an AI platform

Published Date: 2021-01-12         Author: Pankaj Singh

Indian multinational IT company Infosys Limited has reportedly been making headways in digital exponential technologies, primarily in AI (Artificial Intelligence). Shifting from its conventional IT solutions, the tech giant has significantly expanded its cloud-based solutions portfolio amid the COVI... Read More

© 2021 Fractovia. All Rights Reserved