Hospitality firm Oyo said it was suspending payment of monthly benchmark revenue to its hotel partners as it is finding it impossible to discharge its obligations under the master service agreement because of the Covid-19 pandemic.

“In light of this pandemic and various restrictions issued by government authorities, your hotel’s revenue has been significantly and adversely impacted and it is unlikely to improve in the next few months,” Oyo said in a letter to hotel owners.

Oyo’s performance and obligation in relation to the benchmark revenue under the agreement has become extremely onerous and commercially impracticable, it added.

“Oyo is left with no option but to invoke force majeure and wants to put you to notice that it is constrained to exercise its rights thereunder to suspend payment of the monthly benchmark revenue and/or any other amounts payable to you under the agreement,” the letter said. In this regard, “We propose a revenue share model effective March 12, 2020 whereby our commercial engagement, in supersession of the existing commercial terms, under the agreement will be 10 per cent of net revenue,” it noted.

Gurbaxish Singh Kohli, vice-president of the Federation of Hotel & Restaurant Associations of India, said: “Oyo has been regularly defaulting on payments even much before the pandemic and is now using it as an excuse to completely back out of their agreements.”