Challenges and Opportunities for OYO Hotels in the US Market

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OYO Hotels faces challenges in entering and sustaining in the competitive US hotel market. The analysis focuses on key issues such as business model sustainability, profitability, unique selling propositions (USP), and market strategy. With a focus on attracting unbranded hoteliers and providing technology solutions, OYO has the opportunity to thrive amidst competition.

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OYO HOTELS USA: ON YOUR OWN NOT ANY MORE! AHINOAM MAUDA MAAYAN HADASS NOAM KLEIFIELD ZOHAR GERSHONI BGU CONSULTING TEAM JANUARY 2020 BGU CONSULTING TEAM JANUARY 2020

Problem definition How is OYO s classic business model & strategy can remain sustainable for the US hotel market considering challenges ahead in entering the US market?

Key issues Business model USP in USA Profitability

Business model Key issues Should OYO maintain its current business model? How can the current business model can remain sustainable? How can the strategy fit the American hotel market?

Key issues Profitability How can OYO start to return a profit with a reducing in sales between 2016- 2018? How can OYO remain profitable while offering low prices?

Key issues USP IN USA What will be OYO USP in the US market? Should OYO improve its Usp for b2b & b2c sectors?

ANALYSIS

OYO strategy in the world Established in India & operates mostly in Asia UK 2018 JAPAN - 2019 USA - 2019 Franchise business model Expended offering of mid & higher hotel collections (OYO town house & OYO home) In the US OYO was going after franchise without expanding offering

USA Hotel market 18,000 unbranded hoteliers Small hotel owners who are not being well served by the lower tier hotel franchise brands US franchise approach focuses on branding, centralized technology & hit or miss property level operational technology The US franchise approach is hard from the hotel owners side, this is why OYO have an opportunity to attract them and help them with technology & operations

Competitors Competitors: Branded hotels global market USA 71% of the branded hotel market : Asia pacific 50% EU 40% Branded hotels are the biggest competitors in the USA DAYS INN HOLIDAY INN EXPRESS TRU BY HILTON

OYO HOTELS USA: B2B Business model OYO guarantees for partners: 100% increase in revenue In 6 months 70% occupancy everyday

OYO HOTELS USA: B2B Unique selling proposition Increasing occupancy in every way possible: using OYO app, website, call center etc OYO assesses the space for the owners size location & target audience Top quality property makeover Hassle free operations- owners or OYO (that have reliable staff) Transparency with reviews OAM app to track performance Financial support partnership with financial institutions for loans

ALTERNATIVES

alternatives 1 2 3 Stay in the same business model Move to B2B partnership with office real estate Move to full ownership model

Alternative 1- Stay in the same business model Focus on scaling up and strengthing your brand in the us pros - existing and successful business model -you are not the owners of the hotel - Big market - Sharing revenue -outsourcing management cons

Alternative 2- Move to whole ownership model Use your advantage and knowledge to expend to new model pros - owning management - New business model - No distribution in incomes - High expense - High risk - Big competition cons

Alternative 3- Move to B2B partnerships with office real estate Use your advantage and knowledge to expend to new customers with a familiar model pros - existing business model - New customer segment - New customers - Big market cons

Recommendation

Dicision matrix- in scale of 1-5 profitably Business model USP in US total weight 0.4 0.3 0.3 Stay in the same business model 4 5 4 Move to full ownership model 3 3 2 Move to B2B partnerships with office real estate 4 4 3

Diction matrix- in scale of 1-5 profitably Business model USP in US total weight 0.4 0.3 0.3 1 Stay in the same business model 4 5 4 4.3 Move to full ownership model 3 3 2 2.7 Move to B2B partnerships with office real estate 4 4 3 3.7

Diction matrix- in scale of 1-5 profitably Business model USP in US total weight 0.4 0.3 0.3 1 Stay in the same business model 4 5 4 4.3 Move to full ownership model 3 3 2 2.7 Move to B2B partnerships with office real estate 4 4 3 3.7

Recommendation We recommend you to keep your excellent business model with minor changes in USA, add sub-brand and create partnerships networks in order to increase profitably. in addition, continue to spread in the USA, sharp your USPfor your customers: B2B & B2C and in the long term, consider the option to purchase hotels and duplicate your model for other real estate fields.

Implementation Plan

Business model Implementation Plan USP in USA Profitability Business model Sub-Brand Partnerships Growth Strategy USP

Business model Sub-Brand USP in USA Profitability 3 Sub-Brands Low Medium Premium Up to 40$ per night 40$-80$ per night 80$-120$ per night

Business model Partnerships USP in USA Profitability Signs partnerships contract with a variety of companies Food, transportation, entertainment & tourist attraction etc Create a discount system for your customers Offering: every booking will get discount An earning point system for b2c customers

Business model Business model USP in USA Profitability Stay as you are but add minor changes: In occupancy of 70% asset owner will get 20% Above 70% hotel owner gets 10% from revenues

Business model USP USP in USA Profitability B2B Guaranty of revenues Personalized audiences OAM- track performance Business manager Financial support

Business model USP USP in USA Profitability B2C High standards for rooms Diversity discounts according to partnership Earning points in app: 10 points on each booking, 100 points night for free, one plus one 50% off Tailor made offers according to segments: geographic, age, gender

Business model USP- Marketing for B2C customers USP in USA Profitability In-house hotel Social media

Business model USP- Marketing for B2C customers USP in USA Profitability In-house hotel Examine the foot print in hotels Free WIFI Check in in hotel and get points

Business model USP- Marketing for B2C customers USP in USA Profitability Social media Instagram page for travel trends Offerings in application

Business model Growth Strategy USP in USA Profitability Year 1 O-6 months: 60 hotels 6-12 months: 70 hotels Year 2 150 hotels Total: 330 hotels in the United States R&d: Purchasing hotels Year 3 Examine the option to purchase more hotel Contingency plan: duplicate your model to office spaces real estate

Increase partnerships in the USA 160 140 120 100 80 60 40 20 0 2019 2020 2021 2022 increase in hotels in usa

Time line Year 1 Year 2 Year 3 Marketing for B2C customers Instagram campaign R&D Examine new develop option New sub branding USA develop team App launch Develop new partnerships 60 new places 70 new places 150 new places

Risk Mitigation Risk Probability Mitigation Premium offer wont attract new customers low Targeting the prorate audience in the US including tourist & family Not enough strong partnerships low Strethn the brand and giving the partners accesses for your customers Big competition in the field Medium Expend activity for office spaces real estate

Capex- in 000s $ New branding 300$ App development 1,000$ Social media campaign 20$ Develop in store marketing 30$ R&D 100$ TOTAL 1,450$

Opex- in 000s $ marketing 1,000$ USA develop team 10 worker- 400$ per year TOTAL 1400$

Income forecast 20000 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 on going new activities