Blackpool hoteliers fear that they may be driven out of business what they see as unfair cost cutting by a global hotels business.
OYO which moved into the resort for the first time this spring with partnerships with ten hotels, has seen a rapid rise since it was founded in 2013 in India by Ritesh Agarwal.
It’s business model is that it works with small and mid-sized hotels offering them its own computer system, branding and a drive to increase occupancy rates in return for a cut in profits.
But other Blackpool hoteliers have been alarmed by some of the prices that OYO-partnered hotels have been offering and say that they simply cannot compete with a global giant’s financial muscle.
Charlie Docherty from the Central Blackpool Business Forum said he had several members calling to say how worried they were.
He said hoteliers believed OYO was big enough to operate at a loss to win market share.
He said: “We looked on booking sites and saw OYO hotels in Blackpool offering rooms for as little as £11.50 a night.
“One was offering a double room from Monday to Friday for just £60.
“One hotel owner said they had a phone call from one of their regular visitors who said that the OYO hotel was offering rooms £30 cheaper for a double room.
“He asked them to match it but they could not and so lost the customer.
“A big company with a lot of money can afford to operate at a loss, but family hotels cannot.
“People think they will drive us out of business, or force people to sign up with them.”
But OYO has strongly disputed the claims saying the £11.50 price was per person for a double room in June and now entry level room rates at the hotel in question start from £28.80 per double room during quieter parts of the week and that the average cost of rooms were £52.
The head of OYO in the UK, Jeremy Saunders, has denied that the rapidly growing global hotels group has a campaign of price cutting in Blackpool.
The group has ten hotels under its brand in the resort with plans to sing up more to its model of offering technology, revenue management, backroom operations and investment for partner independent hotels.
Jeremy Saunders said deep discounting was not their strategy and in fact it would be counter productive.
He said forcing partner hotels to drop their prices would obviously upset the hotels’ owners and would hit their’s and OYO’s profits.
that he had the view that it was important that all hotels in a cluster should be successful whether they be OYO branded or not as success in an area is mutually beneficial and breeds more success by attracting more guests. Having derelict hotels in the area would hurt everyone’s trade.
The alleged low prices offered by some OYO hotels after the launch two weeks ago, he said were probably just due to glitches as the new system synched with the computer system or a special offer on quiet days to get the business going.
But he added that the OYO hotels would offer discount room rates at certain times, such as on days early in the week when traditionally hotels were far from full or out of season.
He said: “Blackpool is very busy at the weekends and the prices are extremely strong at those times, but yes, when its quieter, then absolutely we will be offering lower prices.
“But there is no systematic strategy of cutting prices. Our strategy is to improve the revenue for the hotel owner and improving the experience for the guest.
“One of the things that excites me about OYO is that when we are lucky enough to strike up a partnership with a hotel, then we can improve it for the owner and guest. We have a tangible impact and it can benefit the entire street.
“I want the entire area in which we have our hotels to be thriving.
“Blackpool is amazing destination and attracts a huge volume of business every year so we wanted to be part of that, but it does face some challenges and we want to be part of the drive to improve.”
He added that they would be meeting with the Central Blackpool Business Forum on July 18 to hear people’s concerns.
OYO works with independent hotels worldwide, offering its own technology and apps for pricing and maintenance, a team of revenue managers focused on improving the profits and working with distribution channels, an operations team of OYO Captains who work with owners and general managers, and an audits team to look as standards and see what investment each individual hotel needs.
But Charlie Docherty said hoteliers in Blackpool were still concerned about OYO’s business model.
He said: “They say they will only cut room rates when they are not busy or in winter, but it is July now, the start of the season and £60 for a week speaks for itself.
“We will be meeting them on July 18 and we are also going to be talking to council chief executive Neil Jack to discuss the issue. Owners are very concerned they will be driven out of business. We just want them to have reasonable rates.”