Infusing OYO with the right ingredients Genevieve Roch, Akshay Joshi, Rachel Simmons Paul Bugnon JMSBConsulting Agenda Recommendation Analysis Alternatives Implementation Financials Is OYOs strategy sustainable enough to support its US
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Presentation Transcript
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Infusing OYO with the right ingredients Genevieve Roch, Akshay Joshi, Rachel Simmons & Paul Bugnon JMSBConsulting<br>
Is OYO’s strategy sustainable enough to support it’s US expansion and associated job opportunities?<br>
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Combine local flavor with chain reliability Ensure a unique experience while maintaining a standard of quality<br>
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ANALYSIS<br>
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Trend for travelling sets customer expectations<br>
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OYO offers the standards expected by customers Standards OYO must differentiate itself from chains Price OYO Budget Chains AirBnB Luxury Chains Solo locations<br>
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OYO capitalizes on the demand for unique experiences Uniqueness Uniqueness permits adaptability and reduces overhead costs Price OYO Budget Chains AirBnB Luxury Chains Solo locations<br>
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OYO can capture the unbranded US market Uniqueness Price OYO Budget Chains AirBnB Luxury Chains Solo locations 50% unbranded; approx. 18,000 locations<br>
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US expansion supported by sustainable plan Ensuring the right talent is essential for this expansion<br>
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FINANCIAL ANALYSIS<br>
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Global business model Valuation & expectation are reasonable with their current metric Revenue:
$2.04B Valuation:
$10B Multiple:
5x 70% occupancy
20% commission
$40 average rent/day 100% growth rate<br>
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Global business model Overall OYO is near break even Current loss:
$0.2B Current overhead:
$2.2B Room required:
1.2M 17 000 employees
1 000 engineers 10% loss<br>
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US business model Target for the US market are reasonable, but need the speed up US investment:
$300M Target for US:
250 hotels
30 180 rooms Current: 50 hotels Total potential target: 18 00 hotels Current Onboarding rate:
0.25 hotel/day
Required rate:
1 hotel/day<br>
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US business model – CapEx per hotel Capital allocation for US is on track Average CapEx per hotel:
$240k US investment:
$300M Total CapEx in US:
$60M Payback per hotel:
10.2 Months 70% occupancy
20% commission
$40 average rent/day<br>
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ALTERNATIVES<br>
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Criteria for OYO’s Success in the US OYO needs to leverage its proprietary technology to establish a differentiated business model in the US<br>
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Choosing the best strategy for OYO Ensure a unique experience while maintaining a standard of quality Capacity Potential Market Size Long-term Growth<br>
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Risks RISK CONTINGENCY MITIGATION Impact Likelihood MED MED LOW HIGH<br>
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IMPLEMENATION<br>
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Timeline at a glance Target: 1/day expansion Target: 2/day expansion Local activity guides and menu items ‘What to do’ App development Approach local businesses for advertising opportunities on ‘WtD’ app ‘WtD’ app links to loyalty program Ensure new hotels are using OYO back-end technology Customer loyalty program for perks Business/frequent traveler ‘guaranteed rate’ packages Training program for new US hires Add Director of Customer Experience Add VP position in Customer Experience C-Suite and management role structure<br>
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Expansion plan<br>
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Branding: Infuse OYO with local flavor OYO Nashville OYO Yakima Valley Wifi, comfortable beds, fresh linens, clean rooms, safe for solo travelers and women<br>
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Customer loyalty Customer profiles and data to improve services<br>
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Organizational Hierarchy<br>
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Organizational Hierarchy Work together to ensure local elements, app and loyalty program combine for a unique customer experience Contribute to outreach with local business and app population<br>
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Employee Training Program 3 month onboarding
Employee teambuilding through testing local activities<br>
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FINANCIALS<br>
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Plan financing Current investment and future free cash flow ensure financing US investment remainder: $150M
2021 FCF : $50M
2022 FCF : $100M Use of funds:
$300M<br>
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Budget breakdown (US Mil)<br>
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Financial projection (US Mil) US operation can be very profitable, with the target 5% of independent hotel Total CapEx:
$216M Target market share:
5%<br>
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KPIs – for US market KPIs to track to ensure plan success<br>
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Combine local flavor with chain reliability Ensure a unique experience while maintaining a standard of quality<br>
