Key Issues and Solutions for OYO Consultancy Team

Go OYO or not? XMU CONSULTANCY TEAM SUSAN, GEORGE, ALEX, PHIL

Key Issues Shall Michel Apply a Joy in OYO? Can OYO reach succeed in USA? 1.Challenge 1: Low market share 2.Challenge 2: High cost 3.Challenge 3: Capital demand (Big Initial investment)

Solution Win-Win for stake holders, Owner, customers, OYO, new partners! Financial Management optimization JV-sub company (Big data) For Michel, You can apply position with OYO, suggest BDM! Cost reduction Revenue increasing Solve the long term problem Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Agenda Key Issues Analysis Alternatives & Evaluation Recommendation Implementation Risk & Mitigation Conclusion

Analysis--Market Stay room nights performance 80 6 75 5.7 70 5 Global stay room nights continuosly increase. Main increase place China. 60 4 50 40 3 30 2.2 2 20 1.5 13 1 10 6 4 0 0 2015 2016 2017 2018 stay room nights in Millions growth rate

Analysis- corporateperformance Financial performance (INR cr) 6000 50.00% 45.00% 4921 44.50% 5000 40.00% Realised value and the revenue is sharply increasing The losses of realised % is decreasing from 44.5% to 10.4% 35.00% 4000 30.00% 3000 25.00% 20.30% 20.00% 1768 2000 1481 15.00% 798 10.40% 10.00% 1000 415 5.00% 120 0 0.00% 2017 2018 2019 Realised Value Revenue Losses(as a % of realised value)

Analysis--Profile 6 years, start from India One of the largest hotel chains in the world Non-branded hotel Profile Bring a standardization to the customer experience that would increase hotel profitability and create a world-class business Target Bring a clean bed and safe environment to all traveler at a budget price Mission Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Analysis Industry 1. Key sepciality, Price and Occupancy keep price 10percent lower, increase the occupancy three times, return still roughly 2.8times. Market Growth---i.e. US hotel market 10th consecutive year growth 2. Market 1. India---largest branded network of budget hotel, commission 22%; 2. India---173,000rooms in 259 India cities 3. China---in less than2years, become largest hotel group in China, 4. China-- by expending to 450,000rooms and 320 cities, most of Tier ii to tier VI 5. US 21% non branded hotel market 6. 1. Others---Like British and Japan Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

AnalysisBusiness Model 1. Operation 2. Brand 3. Renovation 4. Customer 1. Low price 2. Standard and good service Hotel OYO Customer 1. Book platform 2. Revenue 1. Room Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

AnalysisUS Cost and Income Structure Cost structure Furniture US$200,000 Invest---IT structure Overhead Operation Sales,HRD,BDM,Operation Leader Income Structure Franchising $50,000 Booking commission 20% Sales rebate 5%-10% Alternatives & Evaluation Recommenda tion Implementati on Risk & Mitigation Key Issues Analysis Conclusion

AnalysisStrength and Weakness Strength Special technology, AI analayis Brand awareness Market expertize, operation effeciency. Bargin power with small hotel Weakness Hotel occupancy Price maybe lower than cost Alternatives & Evaluation Recommenda tion Implementati on Risk & Mitigation Key Issues Analysis Conclusion

Alternatives Reposition to target High-End customer to increase Revenue Acquisition and Merge to Expansion Seeking Financial partners to launch JV Financial sub-company Fully usage of Big data & Artificial Intelligence To Optimize Manage Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Evaluation on Alternatives Reposition to target High-End customer to increase Revenue Benefits Risk/Hurts Increase unit revenue/room Win the market share from competitor is pending Additional investment is required both on HR, training, Renovation Etc Negative impact on short-term occupation ratio Non-go option! Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Evaluation on Alternatives Merge & Acquisition Benefits Risk/Hurts Direct secure largely revenue Lots of capital requirement is required Lower successful ration on M&A Implantation worldwide(Roughly20- 30%) We are shortage of capital already!! Non-go option! Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Evaluation on Alternatives Seeking partner to launch JV Financial partners Benefits Risk Solve the capital demand problem in long-term Optimize the cost structure Management team can focus on operation optimization Profits share Equity share A go option! But the partner to be evaluated! Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Evaluation on Alternatives Fully usage of big data to optimize operation manage Long-term benefits while no dramatical investment is required A go option!!! But not enough! Benefits Risk/Hurts Increase ratio of occupancy Timely pricing strategy to cater market Cost reduction by management optimization Standardized the process to improve efficiency Slightly invest is required Investment on big data HR is required Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Recommendation Financial Management optimization Win-Win for stake holders, Owner, customers, OYO, new partners! JV-sub company (Big data) Solve the long term problem Cost reduction & Revenue increasing Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

ImplementationFinancial JV What A new JV company support initial investment. Why Isolate the financial risk and capital demand, and do not dilute the equity. Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

ImplementationFinancial JV How Operation&HR Partner selection Criterion Fiancial lisence Capital capability Brand and repution Service coverage JV partner selection Local fianacial Talents Design a mortage solution for hotel owners. Persuade owner why it works and benefit for them Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

ImplementationBig data improvement What A local big data supportive for US MKT Why Adapt demand of new MKT and customers Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

ImplementationBig data improvement How Data experts in different aspects MKT support in customer profile and behaivor, service level and satisfaction monitor, OPT: Reduce the cost and increase efficient, forecast the hotel demand, room inventory; PR: the public relation monitor and consulting, and UGC management; A series local MKT Campaign based on analysis. Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

ImplementationJob issue of Michel Strength A junior investment banker; MBA student Target Not pay but opportunity is real Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

ImplementationJob issue of Michel Opts HR, no experience, not match ability Sales, no experience, not match ability and potential low Region leader, no experience, not match ability and potential low Proposal Deveplment manager Related experience; Knownledge background; Match the corporate development; Alternatives & Evaluation Recommendatio n Risk & Mitigation Key Issues Analysis Implementation Conclusion

Time Mapping Items 2020H1 2020H2 2021H1 2021H2 2022H1 2022H2 JV Company Loan solution Data center MKT campaingn Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Financial Funding history year equity financing times $ Increasing expanding in the world,especially in China need a lot of Capex Without the profit from key business, need the cash flow from financing Turn the operational Cash flow need on the considering 2012- 2014 3 0.75M 2015 2 125M 2016 1 90M 2017 1 250M 2018 2 1100M 2019 2 200M Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Financial break even test America Market Assumption Breakeven point =10000000/(80*0.7-16) =250000rooms =1667hotels occupancy 70% everage price one room one night US $80 Now we have 50hotels almost 750rooms Need another 1617 hotels and 249250rooms fixed cost US $50M 20% of price variable cost US $ 16 one hotel with the number of rooms 150 Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Funding choice Build the JV with the partners who have the financial license operating the loan business, with the 51% equity holding. So which we need is working capital and Capex 174.9M According the build Capex for renovation about US$200000,we need US$323.4M Add the Big Data research Base in America spending 10M Financing by IPO 200M to supply the business operating and the cash flow Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Time Mapping Items 2020H1 2020H2 2021H1 2021H2 2022H1 2022H2 JV Company Loan solution Data center MKT campaingn Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Risk and Mitigation Risk Probability Mitgation Economic concession caused customer not consume Culture Risk M Control cost Closely monitor M Create respect culture Build a culture committe JV finance company Precisely finance plan Cash Flow Break Down M

Conclusion Win-Win for stake holders, Owner, customers, OYO, new partners! Financial Management optimization JV-sub company (Big data) For Michel, You can apply position with OYO, suggest BDM! Cost reduction Revenue increasing Solve the long term problem Alternatives & Evaluation Recommen dation Implementa tion Risk & Mitigation Key Issues Analysis Conclusion

Thank you!