Leveraging Strengths to Dominate the USA Hospitality Industry
OYO Hotels USA is strategically positioning itself in the competitive hospitality market by focusing on strengths like scalable business model, dynamic pricing, and data analytics. Three potential alternatives - partnership with a USA hotel giant, introducing OYO Restaurants, and launching OYOTainment - are explored to further strengthen OYO's market presence.
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OYO HOTELS USA: COMING TO AMERICA NYENRODE BUSINESS UNIVERSITY KOEN BOUWMEESTER | YANNICK FRYTERS | GOVIND MALLURWAR | JESPER MENTINK
Social Economical Technological Millennials US hotel industry booming Data driven decision making Paying for experiences 10th consecutive year of Artifical Intelligence Transparency growth Machine learning Saturated/Branded market Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Strengths Issues Business Model: Scalable & Asset light USA - Branded Market Data analytics Dynamic pricing One unique selling point Cost reduction (Application/ORBIS) Loss Full control of distribution Low marketing costs Strict standardizing guidelines Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
How can OYO use its strengths in order to dominate the USA hospitality industry? Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Pros Cons Alternative 1: Partership USA Hotel Giant What? Leverage existing brand name (i.e. Marriott) in USA Hotel market Providing the successful data analytics strategy Why? Creation of an extra unique selling point Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Pros Cons Alternative 2: OYO Restaurants What? Rebranding and franchising restaurants Combined hospitality industry Why? Additional service and discounts to OYO users Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Pros Cons Alternative 3: OYOTainment What? Differentiation strategy Entertainment and experiences Why? Millennials value experiences Use strengths of data analytics Expanding product portfolio Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Alternative 1: Partnership Alternative 2: OYO Restaurants Alternative 3: OYOTainment Pros Cons Pros Cons Pros Cons Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Social and behavioral changes demand experience and entertainment Product differentiation strategy Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Value proposition Value proposition Target customers Standard hotels with competitive prices Add-ons which are tailored fit for the experiential needs Revenue logic Partners Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Value proposition Target customers Target customers Millennials People who seek experiences Revenue logic Partners Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Value proposition Partners Target customers Museums Sports tournaments Fine dine restaurants Adventure sports City tours Revenue logic Partners Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Value proposition Revenue logic Target customers Over 5 yrs NPV of 20 million USD Revenue logic Partners Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Search for partners Market research 3 months 2 months Negotiating with partners Develoop capabilities for pilot 2 months 4 months Build Minimum viable product Roll-out in Vegas 4 months 3 months Continuous process Expand Investors 6 months Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Financial Model Replicate commission based revenue model (10%-20%) based on activities Expansion linearly with hotel expansion (ambition is 5 hotels a day) Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Item Description Digitalizing product offering Replicate Algo for Entertainment Addition Data Analytics Team Additional Team Members $ Type Flyers-to-digital $ 2,000,000 One-time Algorithm $ 5,000,000 One-time Employees $ 1,000,000 Ongoing Employees $ 500,000 Ongoing Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Cash Flow $60,000,000.00 $50,000,000.00 $40,000,000.00 $30,000,000.00 $20,000,000.00 $10,000,000.00 $- 1 2 3 4 5 6 $(10,000,000.00) Year 0 1 2 3 4 5 (perpetuity) 75,000,000.00 $ 32,667,993.46 $ Sales Present Value NPV $ 20,000.00 (1,462,962.96) $ $ 94,000.00 (1,634,087.79) $ 441,800.00 $ (1,681,495.45) $ 2,076,460.00 $ (966,961.17) $ (7,000,000.00) $ 19,922,486.08 $ Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Mitigations Risks - Provide support to local businesses - Lack of IT infrastructure - Leverage achieved yield increases in hotel business - Entertainment providers not willing to have fluctuating pricing Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
Year 0 1 2 3 4 5 (perpetuity) Sales $ 20,000.00 $ 94,000.00 $ 441,800.00 $ 2,076,460.00 $ 75,000,000.00 COGS $ 100,000.00 $ 200,000.00 $ 400,000.00 $ 800,000.00 $ 16,000,000.00 Gross Profit $ - $ (80,000.00) $ (106,000.00) $ 41,800.00 $ 1,276,460.00 $ 59,000,000.00 % -400% -113% 9% 61% 983% Operational Expenses $ 2,000,000.00 $ 1,500,000.00 $ 1,800,000.00 $ 2,160,000.00 $ 2,592,000.00 $ 11,000,000.00 Capex $ 5,000,000.00 Cash Flow $ (7,000,000.00) $ (1,580,000.00) $ (1,906,000.00) $ (2,118,200.00) $(1,315,540.00) $ 48,000,000.00 % -7900% -2028% -479% -63% 800% Present Value $ (7,000,000.00) $ (1,462,962.96) $ (1,634,087.79) $ (1,681,495.45) $ (966,961.17) $ 32,667,993.46 NPV $ 19,922,486.08 Problem Statement Risks & mitigations Analysis Alternatives Final Solution Implementation Financials
