OYO Hotels USA Expansion Strategy Analysis

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"Explore the key issues and recommendations for OYO Hotels entering the American market, covering sustainability, growth feasibility, and profitability. The analysis delves into the business model, objectives, and value proposition of OYO in emerging countries. Discover how technology and standardized services play a crucial role in transforming the budget hotel market. Stay informed about the challenges and potential risks associated with OYO's expansion plans."

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B B BARNA Management School Consulting Team OYO Hotels USA: Coming to America Presented by: Alexander Diaz, Betsy Jimenez, Loren Medrano & Nathalie Duarte January 2020 Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B AGENDA Context Key Issue + Recommendation Analysis Strategy Implementation plan Financials Risks Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B CONTEXT Stayed Night - Millions 75 80 70 60 Unicorns of unicorns 50 40 One of the largest hotel in the world 7 markets India, China and UK among other 30 20 13 6 10 4 0 2015 2016 2017 2018 Stayed Night Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B KEY ISSUE + RECOMMENDATION Can OYO s actual business model be sustainable and replicable in new markets? Expected growth feasibility Profitability Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B KEY ISSUE + RECOMMENDATION Can OYO s actual business model be sustainable and replicable in new markets? Expected growth feasibility Profitability RECOMMENDATION: UPDATE TO A NEW BUSINESS MODEL Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B OBJECTIVES Determine if Michel s has a real opportunity Develop a sustainable business model Guarantee IPO Attractiveness Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

ANALYSIS Business Model B FROM TO EMERGING COUNTRIES TRANSFORM HOTELS WITH TECHNOLOGY OYO INVESTS IN HOTEL STANDARIZATION AND PRESENTATION OYO GETS A COMISSION (18%) FRANCHISE BUSINESS MODEL IMPROVED BY: INTUITIVE APP (10 MM DOWNOLADS) OFFERING TECH DIFFERENT SERVICES BUDGET MARKET Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

ANALYSIS Value Proposition Canvas B High quality room at low price Jobs to be done Transparency Standard experience Gains Pains Variability in service and customer experience Discoverability False claims Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

ANALYSIS Value Proposition Canvas B High quality room at low price Jobs to be done Transparency Standard experience Gains Pains Variability in service and customer experience Discoverability False claims Small mom-and-pop hotels to a NEW LEVEL Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

ANALYSIS SCOT B High tech knowledge and structure IT algorithms for business purpose (occupancy increased between 25% - 65%) 1 million rooms 350,000 daily visitors Adapt business model to develop countries Select the right room design for each partner 24/7 customer serviceS C O T High competitive environment. 18,000 unbranded hoteliers in USA. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team STRATEGY Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B ALTERNATIVES Return to previous business model: only commission 1 Maintain actual business model: franchise 2 3 Update to a new business model Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B ALTERNATIVES Return to previous business model: only commission 1 Maintain actual business model: franchise 2 3 Update to a new business model Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B CRITERIA Added value proposition Profitability Feasibility Sustainability Replicability Customer experience IPO attractiveness Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B DECISION MATRIX Added value proposition Customer experience IPO Profitability Feasibility Sustainability Replicability attractiveness Return previous business model: commission to Maintain actual business model: franchise Update to a new business model Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B DECISION MATRIX Added value proposition Customer experience IPO Profitability Feasibility Sustainability Replicability attractiveness Return previous business model: commission to Maintain actual business model: franchise Update to a new business model Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team Recommendation: Update to a new business model Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B WHY IS THIS YOUR BEST OPTION? SUCCESS! Diversifying your current portfolio will give you clear growth opportunity. More customers and revenue streams will lead to HIGH IPO ATTRACTIVENESS. Leverage on IT assets gives you more profits. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team Key Issue + Recommendation Analysis Strategy Implementation ACTION PLAN Financials Risks

B How we are going to update to a new business model? Increase room occupancy. Expand to new verticals leveraging on current assets. WHAT Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B 1. Increase room occupancy rate. Keep OYO s mission to be the world leader based on rooms. WHY 1. Start operations in USA. 2. Increase rooms in actual markets (920,000 rooms to 2023 worldwide). HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B 2. Expand to new verticals leveraging on current assets High tech expertise (1,000 IT engineers) A clear services portfolio development WHY 1. Identify which new business areas requires OYO services with actual technology. Services Optimize pricing Back-end reservation management Food & beverage offerings Procurement of inventory ORBIT agreement process Business Areas Proposal Cleaning services companies Restaurants Restaurants Pharmacy Lawyer offices HOW Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B 1. Expand to new verticals leveraging on current assets 1. Sell app positions to your clients. Position 1st place 2nd place 3rd place Cost per day USD$ 5 USD$ 3.5 USD$ 2 HOW 2. Open your product segment range to respond to consumer needs. *It will require a higher commission for big chains. 3. Incorporate branded content in OYOs communication channels: YouTube, Facebook, Instagram, Website, Apps. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B OTHER TACTICAL INITIATIVES Operations 1. Pay pending licenses HR 1. Hire HR director and team to take care of employees and guarantee proper alignments: communication, salary and pipeline process. WHAT Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B GANTT Implementation Plan Initiative Start operations in USA. Increase rooms in actual markets (920,000 rooms to 2023 worldwide). Identify which new business areas requires OYO services with actual technology. Sell app positions to your clients Open your product segment range to respond to consumer needs Incorporate branded content in OYOs communication channels Pay pending licenses Hire HR director and team to take care of employees and guarantee proper alignments 2019 2020 2021 2022 2023 Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team Key Issue + Recommendation Analysis Strategy Implementation FINANCIALS Financials Risks

B FINANCIAL ASSUMPTIONS Realized value per night has declined a 54.8% from 2017 to 2018 Occupancy rate of 2018 is 35.2% in contrast to 70% Annualized nights of 2018: 80,000,000 Considering the December peak is not constant during year INR TO USD EXCHANGE RATE 22.7 PER INR Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B MARKET SHARE EVOLUTION AND ROOMS AVAILABLE INR cr MARKET SHARE AND # ROOMS 1.4% 2,500,000 FOCUS ON UNBRANDED HOTELS IN USA AND REMAINING MARKET CHINA 1.2% 1.2% 2,000,000 1.0% 1.0% 0.9% 1,500,000 0.8% 0.7% 0.6% 0.6% 1,000,000 ACTUAL OCCUPANCY RATE 35.2%, ACHIEVE 70% BY 2023 0.4% 0.4% 500,000 0.2% 0.0% - 2018 2019 2020 2021 2022 2023 Market Share OYO Worlwide OYOS Available Rooms Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B FINANCIAL ASSUMPTIONS REALISED VALUE (Values in INR cr) 68,057 REALISED VALUE CAGR 2019 2023 OF 55% REVENUE BY 2023: 20,482 INR cr 29,904 11,226 4,921 1,768 798 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2023 Realised Value Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B FINANCIAL ASSUMPTIONS NET LOSSES (% OF REALISED VALUE) 0.3% FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2023 ECONOMICS IMPROVEMENT OF 64% BY 2021 -7.5% -10.4% -10.4% -20.4% ROI OF 1ST YEAR OF PROFIT 51% TARGET PAYBACK OF INVESTMENT 2025 -44.5% Losses (as % of Realised Value) Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B KEY PERFORMANCE INDICATORS # ROOMS +920,000 TO 2023 OCCUPANCY RATE > 70% TO 2023 NPS CONSUMER EXPERIENCE > 8 MONTHLY Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team Financials RISKS Key Issue + Recommendation Analysis Strategy Implementation Risks

RISKS Continengy Plan B RISK MITIGATION HIGH Copy business model Aggressive loyalty program. New verticals. MEDIUM Legal demand Pay pending licenses to Ncrypted. Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B B BARNA Management School Consulting Team Key Issue + Recommendation Analysis Strategy Implementation KEY TAKEAWAYS Financials Risks

B KEY ISSUE + RECOMMENDATION Can OYO s actual business model be sustainable and replicable in new markets? Expected growth feasibility Michel s final decision Profitability RECOMMENDATION: UPDATE TO A NEW BUSINESS MODEL Key Issue + Recommendation Analysis Strategy Implementation Financials Risks

B CONNECTING THE DOTS Determine if Michel s has a real opportunity. Develop a sustainable business model Guarantee IPO Attractiveness Key Issue + Recommendation Analysis Strategy Implementation Financials Risks