Serious Concerns Raised About Agoda’s Commission Changes and Compliance Issues

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Significant issues have emerged regarding the commission practices and compliance of global online travel platform Agoda. The Federation of Hotel & Restaurant Associations of India (FHRAI) has raised alarms over these changes, emphasizing potential impacts on hotel partners and the broader hospitality industry.

Allegations Against Agoda

The FHRAI has expressed considerable concern over Agoda’s unilateral modifications to commission structures without prior notification, which the federation argues creates undue strain on hotel partners. These alterations to commission policies have raised flags over potential violations of such partnerships, specifically indicating that Agoda’s practices may breach terms set in existing contracts.

Recently, Agoda introduced a new pricing model known as the “Reference Sell Rate” (RSR). This approach calculates commissions based on the total room rate that includes GST, diverging from long-standing agreements stipulating that fees should apply solely to the base room rate before any taxes. This substantial shift imposes added financial burdens on hotel operators, especially during a period of fragile recovery in the post-pandemic landscape.

Implications for Hotel Partners

The implications of Agoda’s new commission framework extend beyond mere financial adjustments. Hotel operators may face challenges in accurately managing their revenue and accounting practices due to discrepancies introduced by these changes. With an already struggling recovery process, the added complications could hinder operational stability across the sector.

Concerns Over GST Compliance

In addition to issues associated with commission structures, FHRAI has called attention to potential non-compliance with India’s Goods and Services Tax (GST) regulations by Agoda. The federation alleges that not only has Agoda charged commissions on the GST portions of room rates—an action that contravenes legal guidelines—but it has also failed to apply GST on its commission invoices. This situation may shift the tax burden onto Indian hotels, complicating GST reconciliation efforts and increasing the workload on hotel finance departments.

Operational Grievances from Members

The federation’s concerns do not stop at commission and tax issues. Operational grievances from FHRAI members highlight a series of additional challenges faced in their dealings with Agoda. Reports have surfaced regarding unauthorized promotional discounts applied without the consent of hotel partners, causing further disruption in revenue expectations. Moreover, some members noted payment delays, which are often resolved only by agreeing to pay additional commissions for expedited fund release.

Communication has also emerged as a significant barrier; hotel operators frequently find it challenging to engage with Agoda’s local representatives. Instances have been reported where Agoda made modifications to rate plans without any forewarning, alongside redirecting bookings to competing platforms—practices that can jeopardize loyalty and trust between hotel partners and the platform.

Call for Action and Compliance

FHRAI President K. Syama Raju underlined the importance of maintaining fair partnerships, declaring that the hospitality sector in India is facing critical challenges as it seeks to rebuild post-pandemic. Decisions made unilaterally by platforms like Agoda undermine the balance of these relationships and may violate established legal and contractual obligations.

To preserve a sense of trust and transparency within the hospitality ecosystem, the federation is urging Agoda to reconsider its recent changes. A call has been made for the platform to revert to the original contractual agreements and to adhere strictly to Indian tax regulations.

Conclusie

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