The Bangalore Hotels Association has threatened to halt services with Swiggy from August 15 over disputes regarding payment transparency and unauthorized deductions. Hotel owners allege that hidden charges have significantly impacted their profitability, with some receiving less than half of their billed order value.
The Bangalore Hotels Association (BHA) has issued a warning to the food delivery platform Swiggy, stating that member hotels may stop using its services if ongoing disputes regarding payout transparency are not resolved by August 15. The association, which represents a large network of restaurants in the city, claims that the current payment structure has created financial strain for many small and medium-sized hospitality businesses.
At the core of the disagreement are concerns over how Swiggy handles deductions from restaurant payouts. Hotel owners have alleged that the platform frequently applies charges for promotional advertisements, such as cost-per-click or cost-per-acquisition fees, without obtaining clear consent from the restaurant partners. The BHA is demanding a transparent, one-click opt-out system that would allow hotels to stop participating in these promotional schemes without facing penalties.
Another significant point of contention involves the itemization of payments. The association is requesting that Swiggy provide detailed statements that clearly separate commissions, taxes, promotional costs, and customer discounts. The BHA has specifically criticized the practice of calculating service fees on top of the GST amount, arguing that this adds an unnecessary layer of cost that reduces the net earnings for the restaurants.
For restaurant owners, these accounting discrepancies have become a major concern. According to P C Rao, the honorary president of the BHA, some establishments have reported receiving payouts that cover less than 50% of the original billed value of orders. This situation has led to reduced profit margins, as hotels struggle to manage their operational costs when a significant portion of their revenue is withheld through these various deductions.
While the association has stated that it accepts standard service fees for delivery, it insists that any additional charges must be based on transparent agreements. The BHA has indicated that it is waiting for a response from Swiggy to resolve these issues before the August 15 deadline. If a resolution is not reached, the association plans to move toward alternative arrangements for online orders to ensure business continuity.
Investors tracking the food delivery sector may note that this conflict highlights the ongoing tension between delivery platforms and their restaurant partners regarding take rates and operational costs. For Swiggy, the ability to maintain a strong network of restaurant partners is essential for its service reliability and market presence. The next key monitorable will be whether both parties can negotiate a more transparent payout structure or if the threat of a boycott leads to a service disruption in the Bengaluru market.