B BARNA Management School Consulting Team OYO Hotels USA: Coming to America Presented by: Alexander Diaz, Betsy Jimenez, Loren Medrano Nathalie Duarte January 2020 AGENDA CONTEXT Unicorns of unicorns One of the largest hotel in the
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01
B BARNA Management
School Consulting Team OYO Hotels USA: Coming to America Presented by: Alexander Diaz, Betsy Jimenez, Loren Medrano & Nathalie Duarte
January 2020<br>
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AGENDA<br>
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CONTEXT “Unicorns of unicorns” One of the largest hotel in the world
7 markets – India, China and UK among other<br>
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KEY ISSUE + RECOMMENDATION<br>
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KEY ISSUE + RECOMMENDATION RECOMMENDATION:
UPDATE TO A NEW BUSINESS MODEL<br>
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OBJECTIVES Develop a sustainable business model Guarantee IPO Attractiveness Determine if Michel’s has a real opportunity<br>
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ANALYSIS Business Model 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 FROM TO<br>
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ANALYSIS Value Proposition Canvas Transparency
Standard experience Variability in service and customer experience
Discoverability
False claims High quality room at low price<br>
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ANALYSIS Value Proposition Canvas Transparency
Standard experience Variability in service and customer experience
Discoverability
False claims High quality room at low price Small mom-and-pop hotels to a NEW LEVEL<br>
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ANALYSIS SCOT Adapt business model to develop countries
Select the right room design for each partner High tech knowledge and structure
IT algorithms for business purpose (occupancy increased between 25% - 65%)
1 million rooms
350,000 daily visitors
24/7 customer service S C O T 18,000 unbranded hoteliers in USA. High competitive environment.<br>
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B BARNA Management
School Consulting Team STRATEGY<br>
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ALTERNATIVES 1 2 3<br>
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ALTERNATIVES 1 2 3<br>
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CRITERIA<br>
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DECISION MATRIX<br>
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DECISION MATRIX<br>
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B BARNA Management
School Consulting Team Update to a new business model Recommendation:<br>
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WHY IS THIS YOUR BEST OPTION? SUCCESS!<br>
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B BARNA Management
School Consulting Team ACTION PLAN<br>
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How we are going to update to a new business model? Increase room occupancy.
Expand to new verticals leveraging on current assets. WHAT<br>
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1. Increase room occupancy rate. Keep OYO’s mission to be the world leader based on rooms. WHY HOW Start operations in USA.
Increase rooms in actual markets (920,000 rooms to 2023 worldwide).<br>
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2. Expand to new verticals leveraging on current assets High tech expertise (1,000 IT engineers)
A clear services portfolio development WHY HOW 1. Identify which new business areas requires OYO services with actual technology.<br>
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1. Expand to new verticals leveraging on current assets HOW Sell app positions to your clients. 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.<br>
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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<br>
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GANTT Implementation Plan<br>
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B BARNA Management
School Consulting Team FINANCIALS<br>
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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<br>
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MARKET SHARE EVOLUTION AND ROOMS AVAILABLE FOCUS ON UNBRANDED HOTELS IN USA AND REMAINING MARKET CHINA ACTUAL OCCUPANCY RATE 35.2%, ACHIEVE 70% BY 2023 INR cr<br>
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FINANCIAL ASSUMPTIONS REALISED VALUE CAGR 2019 – 2023 OF 55% REVENUE BY 2023: 20,482 INR cr<br>
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FINANCIAL ASSUMPTIONS ECONOMICS IMPROVEMENT OF 64% BY 2021 ROI OF 1ST YEAR OF PROFIT 51% TARGET PAYBACK OF INVESTMENT 2025<br>
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KEY PERFORMANCE INDICATORS<br>
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B BARNA Management
School Consulting Team RISKS<br>
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RISKS Continengy Plan<br>
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B BARNA Management
School Consulting Team KEY TAKEAWAYS<br>
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KEY ISSUE + RECOMMENDATION RECOMMENDATION:
UPDATE TO A NEW BUSINESS MODEL<br>
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CONNECTING THE DOTS Develop a sustainable business model Guarantee IPO Attractiveness Determine if Michel’s has a real opportunity.<br>
