Homegrown budget retail chain OYO has notified its vendors of possible disruption in payment cycles due to the Covid-19 travel and social ban, according to a media report.
Ankit Agarwal, the head of procurement and supply chain for the company, wrote in a letter to vendors that the hospitality industry was one of the worst-hit sectors due to the outbreak as it is highly dependent on people movement and interactions, The Economic Times reported. The company is impacted “significantly” in revenue and operational cash flow, the report said, citing the letter.
OYO declined to share the letter with TechCircle and said an official statement has not been released yet.
“OYO does see challenges in the hospitality and travel industry in the near term. We, therefore, continue to over-communicate during this time with full transparency and have accounted for any possible anomalies that may arise. It is in this respect that we have reached out to our large vendors and partners as a matter of abundant precaution and notified that there may be possible disruptions in the payment cycle,” the financial daily quoted an OYO spokesperson as saying.
The SoftBank-backed hospitality major has reached out to relevant ministries and state authorities to lease government properties on a pay-per-use basis for quarantine purposes, the report said.
Gurbaxish Singh Kohli, vice-president of the Federation of Hotel and Restaurant Associations of India (FHRAI), said that OYO’s “grand announcement” was ambiguous as it does not say exactly who will foot the bill, the report added.
Owners and property partners too, have expressed their ambiguity on the matter, adding that OYO had been irregular with payments even before the pandemic hit.
“My property has been given on a minimum guarantee basis and payments have been an issue. This is just a publicity stunt. How will they provide these services? They haven’t consulted hotel partners, who own most of their hotels, and their staff has already vacated properties,” Dilip Datwani, an OYO partner with a property in Mumbai, said.