Problem Definition

India’s young workforce is driving the shift to co-living spaces, and drivers such as increasing foreign tourists annually,
reduction in GST and a promising growth in MICE travel enable us to look at a promising hotel industry in the future.
While all of this might partially be paused due to the COVID-19, the expected surge in demand as soon as the situation
is better might be a great opportunity for hospitality chains. With the current market especially the home and co-living
space being highly unorganized, OYO can make significant inroads. For this, it is essential that the efforts of the sales
networks of the BDMs is directed to property owners in the right segments in the right places in the right ways.

Objective Understanding the Problem and Activities Involved

Identify various channels being used through competitor analysis, the scope of these
Channels for
channels in the city/cities allotted, the current model being used by OYO, the resources
Business
available and the awareness, preferences and behaviour of property owners in each of the
Development
categories.
Identify the distribution with respect to each category in the city, the pre-determined
objectives of market share, the revenue to marketing effort relationship and costs involved
Division of BDM for each category, the best practices followed by competitors and estimate the expected
Team Efforts occupancy, ARR and RevPAR for each category by assessing the behaviour of the current
and potential consumers, the preferences of property owners, the current market share and
revenue models of each category.
Identify the hotspot areas based on the current segmentation in the city/cities, identify any
Key Focus Areas new opportunities (in terms of new infrastructural plans) or threats (taking Covid19 into
and Cluster consideration) regarding specific areas, analyzing population and consumer demographics,
Mapping clustering on the basis of the areas identified and demographics, deciding relevant business
segments for each cluster and key focus areas for each segment.

Understanding the Market

The hotel industry in India has been growing fast. The Average Room Rate (ARR) has grown at a CAGR of ~1.88%
from 2016-19, while the Revenue Per Available Room (RevPAR) and the number of hotel rooms have grown at
4.59% and 2.14% respectively.

The growing preference for alternative accommodation also holds great potential for OYO Homes. A survey
conducted by MakeMyTrip in October 2019 showed that one in every two Indian travelers prefer booking an
alternative accommodation like villas, homestays, hotels or cottages to a traditional hotel. The survey also showed
that 48% of the respondents were most likely to book an alternative accommodation for their next trip.

A Cushman and Wakefield Research Publication on co-living forecasts the co-living market size of the top-30 cities,
which is currently $6.6 bn, to grow to $13.9 bn by 2025, with a CAGR of 11.2%. It also expects the consolidated
demand in the top-30 cities (in terms of the number of beds) to grow at a CAGR of 4.55% over the same period,
from 4.19 Mn to 5.7 Mn.

Customer Segmentation: Based on Purpose

9%
Market Segmentation: Basis Categories of Rooms Upper Mid-Scale
18% 31%
Mid Market
Budget
15% Leisure Upscale
5% 33% 19% Luxury
Visiting Friends 23%
Business
22% Medical
Others
25%

Methodology:

1. Analyzing the Current Model: This would involve assessing the model used by Oyo for onboarding
property owners in the city/cities allotted, as well as other models used in different cities. This will
incorporate a stakeholder analysis, for which we would conduct one on one interviews with
customers, property owners listed with Oyo and BDMs.
 2. Identifying Competitors’ Best Practices: We would identify the various channels used by fellow
competitors in the city, their distribution across city and strategies for the same, their presence across
various categories as well as the efforts put in by their Sales Teams across each.
3. Analyzing the Behaviour of Customers and Property Owners through Interviews and Secondary
Data:
Consumer behaviour would be analyzed by interviews with both current and potential customers to:
- Understand their perception of living in an OYO hotel, home or co-living space
- Understand customer spending on each category and preferences, if any
(These two would help us in deciding where the BDM’s efforts would be directed)
- To identify current hotspots in the city, along with potential opportunities and threats

The behaviour of property owners will also be analyzed by conducting personal interviews in order
to:

- Identify preferences for any channel and assess familiarity with various channels
- Assess the amount and the kind of effort required to convert potential property owners

4. Channel Analysis:
After identifying current channels used by Oyo and those used by competitors, and assessing the
preferences of property owners for particular channels, we would identify the scope and viability of
each channel in the city (for instance, the percentage of properties listed with property dealers), and
make recommendations based on the available and planned resources of Oyo.
5. Division of Efforts Across Categories:
This would involve recommendations based on the types of efforts that should be involved based on
best practices, as well as the distribution of efforts based on:
- Revenue potential of each category (which will be forecasted based on market share occupied by
competitors, awareness and behaviour of property owners, insights from consumer behaviour
and the revenue models of each category)
- Revenue potential vs effort relationship

Revenue Potential of Each Category = Estimated Market Size x % Potential Additional Market share
of OYO (Based on competitor analysis) x % Potential of Conversion (Based on behaviour of property
owners) x % Occupancy (Based on consumer behaviour) x Average revenue per time period (since
revenue models differ per category)

Effort for each category= BDM work -hours and other costs (Acquisition, Rent and Lease costs etc.)
with appropriate weights assigned to each to standardize different cost elements

Final Objective- Finding optimum BDM effort strategy by Maximizing Overall Revenue/ Overall Effort

Assuming:

- All property owners can be made aware and reached through the channel involved for the sake of
comparison. The efforts involved in doing so will be included in the revenue to effort relationship.
- The market share already occupied by Oyo has been deducted since we wish to compare the
effort involved to the benefits involved with onboarding new property dealers.

6. Demographic and Geographical Analysis of the City: This would involve demographical analysis and
identification of current geographical distribution and hotspots using secondary data.
7. Clustering: Based on the above, clusters will be formed. Relevant business segments for clusters and
key focus areas will be identified.

Overview and Timeline # Time in Weeks 1 2 3 4 5 6 7 8

The following timeline will be used by us to Current Business Model and
come up with the final Hunting model 1            
Competitor analysis    
incorporating factors affecting all 2
Stakeholder Behaviour Analysis-
           
Primary and Secondary Research    
stakeholders. The Hunting Model will
Identification of Channels and
comprise of-: 3            
Demographic Clusters    
  Mid Review                
- Structured BDM effort strategy
Mapping of Clusters -with relevant
for the 3 Business segments 1
Business segments
   
 
Strategic and Sales Plan to get more
2 property owners and customers on            
board    
‘Hunting Model' incorporating all
3            
stakeholders    
- Cluster - Business Segment fit mapping and key focus areas for each combination
- Growth strategy with appropriate channels to target for each cluster across the three business
segments