After MakeMyTrip (MMT) group’s chief executive Deep Kalra’s recent comment that the Federation of Hotel and Restaurant Association of India (FHRAI) has no locus standi to determine commercial agreements between MMT and the establishments on its platform, Gurbaxish Singh Kohli, VP, FHRAI, says, “Goibibo and MMT have been exploitive, unethical and adapted divisive business practices, leading to predatory pricing, market distortions and cannibalisation. I fail to see how our letter clearly worded as requesting to “resolve” the situation would be misconstrued as trying to “dictate” terms. India has approximately 100,000 establishments which provide accommodation. Approximately, 65,000 are structured licensed establishments, out of which around 45,000 hotels are stand-alone hotels.
“FHRAI has never got involved all these years in any negotiations with standalone vendors but takes a strong stand when the industry faces any outside coercion or intimidation. It is only when 1000’s of hoteliers realised Goibibo and MMT’s arrogant method of pressurising the small hotels in high commissions, more free rooms, started price control on the owners. FHRAI has, in its fiduciary duty stepped in to amicably resolve matters. Please note FHRAI is not here to negotiate as wrongly being projected. It is here to ensure that agencies like MMT and Goibibo do not take the industry for granted by parenting such market conditions in which it would be difficult to do business for one party but a win-win situation for the other.”
He further said, “Going back to December 7, 2018, whilst the Ahmedabad Hoteliers blocked GOMMT in the city, Kalra wanted to sit with FHRAI and work out the issues. The team sent to “resolve” arrived but with a fixed agenda of “fixing” only commissions that too by a paltry reduction of 22 from 25 per cent. The same FHRAI today has no locus standi according to him. The larger question is “Why are MMT and Goibibo scared to sit with FHRAI? Why can’t the issues be resolved amicably – especially when he calls all the hotels his “partners”?
“The answers are obvious – divide and rule and continue to exploit the free-standing hotels, so that the foreign investors are pleased whilst crippling the small hotels in India. Goibibo and MMT are thriving on those stand-alone properties by taking away huge commissions, free rooms under the disguise of volume business and service charges from the person making the booking.”
According to him, the two are demanding service charge from their clients, while hotel bookings are made on their website. Unusually, they have no standard policy for service charge, meaning every reservation made on their platform would charge a different percentage of service charge and in some chain hotel reservations no service charge is demanded at all. Does it mean they are providing the so-called website service towards the stand-alone hotels and the chain hotels no service is provided? They are fooling the consumer.
He also says, “Goibibo and MMT have been unethically promoting illegal hotels, illegal B&B on their platform to earn profits and commissions. We had pointed out in our letter to them which is available for all to see. We have only asked them to come to terms and resolve differences so that a level-playing field is created for both and does not unduly favour any one party. How is that dictating terms? There has been no answer to our other issues. What are they doing to delist illegal accommodations? Swiggy and Scootsy had to de-list 6,000 operators in one day after we pointed out similar conditions to the government. This is a huge security problem and I would like to know why Kalra is choosing to highlight only the commission part and not even touching this burning and grave issue. They should have the morals to promote “Incredible India Campaign” with the pledge of “Safe & Honourable Tourism” in India by providing safe accommodation. Is this too much as ask for?” FHRAI is 63-year old apex body for the hospitality industry of India. FHRAI is the voice of the hospitality industry and provides an interface between the hospitality industry, policy makers, academics, international associations and other stake holders.
FHRAI has asked to look at partners’ contract as the one shown below:
- Standardised commissions 12% to 15% instead of 30%-40%
- No Discounting hotel rates which are already listed
- Not to infuse GOMMT funds to further discount hotel rates
- No service charge on hotel bookings
- They charge SC on stand-alone hotels only
- They don’t charge service charge on chain hotels
- They don’t charge service charge on airline tickets
- NO PLB / VDI – free room demands / schemes
- De-list all the illegal hotel, illegal guest houses, illegal B&Bs immediately