OYO is making a mistake with unmarried couples policy

By Mihir Sharma

Meerut, an hour’s drive from Delhi and home to a mere couple million people, is what in India’s crowded north is considered a small town. There isn’t a lot to recommend it to visitors, and it doesn’t exactly receive hordes of tourists. And yet, the city’s hotels have been all over the news recently.

The OYO Hotels chain, backed by Softbank Group Corp, announced last week that it would no longer allow unmarried couples to check into its hotels in Meerut and might extend that policy to other towns. Bookings could in theory be cancelled if guests can’t provide proof of their relationship.

Naturally, the policy has set off something of a firestorm. It has also underscored how companies may increasingly struggle to deal with India’s deepening social and political divisions.

OYO said it “respected” individual freedoms and personal liberty, but also felt bound to respond to complaints from what it described as “civil society.” Few have any doubt that, in this case, the term is a euphemism for the socially conservative right-wing groups that have claimed growing political influence under India’s Hindu nationalist government.

Companies everywhere must manage local politics, of course. But corporations that operate nationwide can’t afford to give too much away. Compromises in one part of the country can diminish trust in one’s brand elsewhere. Isn’t branding, at its core, the promise of a uniform experience?

True, OYO has thus far limited the new rules to one city. But activists in the much more prominent tech hub of Bengaluru are now demanding a similar ban there. Will OYO be forced to give in? And will the company expect couples to keep track of when they need to bring their marriage license as they travel from city to city across India?

When OYO launched about a decade ago, its promise was the exact opposite. Checking into a budget hotel in a strange town with one’s partner used to be a tense experience; couples never knew if they’d be the target of harassment or be denied a room. OYO, as one Indian columnist put it, “democratized access to private spaces for a burgeoning young population.” That was the company’s core value and the primary source of its appeal.

OYO isn’t the first firm to be tripped up by India’s internal divisions. Drivers for food-delivery service Zomato Ltd., the first app-based startup to be added to the benchmark BSE Sensex, have sometimes objected to handling pork or beef dishes, on religious grounds. Like OYO, Zomato sometimes tried too hard: It briefly announced a new segregated service for vegetarians last year before a national outcry forced it to backtrack.

Economists and officials sometimes argue that “mass services” — including hospitality chains and delivery services — can provide the jobs and growth that the country’s lackluster manufacturing sector cannot. Many of these companies have scaled up swiftly, are used by tens of millions of people, and include some of India’s fastest-growing employers. And they, in turn, tout the vast size of the potential market to entice investors.

With size comes with diversity, however. And, unlike toy makers or sellers of detergent, service-based companies must deal with customers as people. There’s no point achieving scale at the cost of your brand’s core appeal.

In any case, companies that attempt to keep up with unpredictable political tides can spend too much time over-correcting. It is ironic, perhaps, that OYO decided to wade into social policy the same week that Meta Platforms Inc.’s Mark Zuckerberg reversed course on eight years of content moderation. Policies begun for political reasons will have to be abandoned for political reasons. The biggest loser is often the company caught in the middle.

Indians expect great things from a startup sector that seems dynamic and world-class. These firms, in turn, are counting on India’s vast scale to ensure their fortunes. If they don’t learn to manage India’s diversity, however, it almost certainly won’t.