OYO is India’s fastest growing chain of leased and franchised hotels, homes and living spaces. With its valuation at $5 billion USD, the company was ranked the 10th most innovative company in India in 2018. While OYO is currently present in 11 countries, we feel Mexico would be a perfect fit for OYOs operation style.
According to Horwath HTL Mexico's economy it is expected to contract -8.3% in 2020 and grow 3.2% in 2021 and 2.05 in 2022. For Mexican economy V-shaped recession is expected. Mexican economy is expected to suffer a pronounced decline followed by a recovery due to improvement of macroeconomic conditions. Mexico with population of almost 130 million, abundant natural resources , and a rich cultural history and diversity, Mexico has the 11th largest economy. Mexico has strong macroeconomic institutions and it is open to trade and private investment.
Compared to Central and South American countries Mexico occupies the largest share in the number of rooms. In 2019 when compared to the North American region Mexico was located in second place for largest growth in supply.
Similar to the market in India, people in Mexico expects basic amenities in a hotel like clean toilets and room, low price and some standard amenities. For people in Mexico safety is one of the important factors. They also expect a shuttle from the Airport to the hotel because people do not trust the local transport in Mexico for safety reasons.
Mexico suits OYO’s qualities of branding broken unbranded assets around the globe into a better quality living space since it is considered a third world country. If looking to market and expand into Mexico as a franchise, the operation cost would be very low and the company could provide low rates to customers. OYO’s marketing strategy would mainly target domestic Mexican travelers but could potentially be a hotspot for travelers from the United States and Canada.
Since OYO is already operating fully in Texas with hotels in San Antonio and Dallas, the company could in particular leverage the model San Antonio uses since city’s population is primarily Mexican so executives can look at revenue driven results from San Antonio to see how and where it wants to position itself in Mexico and could maybe position itself near the border and San Antonio.
Prior to operating in Mexico, OYO needs to make sure its fundamental business in India is running smoothly to ensure it is fully ready to expand into a new country as additional costs may be incurred. Also negative reviews from Indian Hoteliers would discourage Hoteliers in Mexico to sign contracts with OYO. It will also discourage customers from choosing OYO hotels.