Case

Non-Disclosure Agreement
By completing and returning the following case, you (the candidate) agree to keep confidential all information and data contained within this case. As part
share, distribute, or copy - either entirely or partially - information found within this case. Details about this case, personal notes, or any answers related to
shared with any other party.
Failure to uphold this agreement could result in disqualification and removal from employment candidacy. This agreement is considered signed upon receip
answer files. Please contact your interviewer for any questions or clarifications on this agreement
Background
For the following case exercise, you are to assume that you are the owner of a premium boutique hotel chain. As the owner, y
potential opportunities to grow the company by adding a new location. The hotel chain is currently located in 5 major metro m
States: New York, Washington DC, Boston, Miami, and Chicago (see map below)
Map of Current and Proposed Locations
Opportunities for Growth

Given your current availability of capital and cash flow from other properties, you are able to finance one new hotel location.
an initial research, and identified two potential locations for expanding and building a 6th location: San Francisco, California or
Kingdom.
Your hotel chain relies primarily on business travelers, who currently make up 80% of your total customer base, and based on
Francisco and London both have the highest volumes of business travelers not currently served by one of your existing hotel lo
San Francisco - As the world's tech epicenter, San Francisco is one of the fastest growing business travel destinations in the Un
costs have grown 47% in the past 10 years, however a constrained supply of hotel rooms in the San Francisco market has resu
occupancy and high nightly rates. Large hotel chains capture the majority of the business traveler market share in San Francisc
programs and high numbers of locations worldwide.
London - Europe's financial capital and largest business destination is London, the city receives over 32 Million total visitors pe
demand has been strong and steady, boutique hotels are numerous and growing. This increase in boutique hotels has resulted
competition, with a total of 123,000 hotel rooms in the 3-5 star range.
Task
You will be given a week to determine which city you would select for a 6th hotel location. You will be required to complete, a
two deliverables by email within the time allotted:
Quantitative Analysis - Please use this excel file, and the following data tables to answer the questions below. Keep your form
demonstrate how you arrived at your conclusion. Be sure to examine sensitivity of best and worst case scenarios in your analy
Qualitative Analysis - In the accompanying word document, please construct a memo detailing your expansion plan, and expl
your next hotel location. Potential topics to include are listed below.
Please clearly state any assumptions, and save your work using the following naming convention:
(First Name) (Last Name) (Date - DDMMMYY).xls - Abe Lincoln 05May17.xls for the spreadsheet
(First Name) (Last Name) (Date - DDMMMYY).doc - Abe Lincoln 05May17.doc for the memo
Quantitative Questions:
1. What is the range of expected nightly revenue for each hotel location?
2. What is the expected annual total cost per room (Fixed + Variable)?
3. What would be the occupancy rate be for both the best and worst booking scenarios? (occupancy rate = Bookings/Available
4. What is the annual Profit/(Loss)?
5. What is the profit margin?
Bonus Question - What is the break-even occupancy rate required at each location? (minimum percent of rooms needed to fil
Qualitative Topics - Your memo may include, but is not limited to the following:
1. Decision for hotel location and supporting arguments
2. Customer segmentation
3. Competitive factors/Strategies for increasing market share
4. Marketing plan for new hotel launch
5. Risk analysis and mitigation
6. Product differentiation strategy
7. Potential ideas to explore for increasing profitability
8. Additional data you would like to better inform your decision
Bonus Question - Assume the owner of a parcel of land next door has approached you with the opportunity to purchase her la
property. This would allow you to either double the size of your hotel (increasing it from 200 to 400 rooms), or add an addition
a spa, convention/meeting space, or another bar/restaurant. What would your decision be? Explain your reasoning.
Disclaimer:
All data contained within this case is hypothetical and intended for the use of this case only. Assume 365 days in year. No exte
required to complete the case. If additional information is required, simply provide a reasonable assumption and outline it clea
sitive profit)
Revenue San Francisco London
Forecast Average Revenue per Booking
Business Booking
Hotel Room (per night) $190 $195
Dining (per night) $20 $35
Services - Dry cleaning, Wi-Fi, etc. (per stay) $25 $30
Leisure Booking
Hotel Room (per night) $170 $185
Services - Dry cleaning, Wi-Fi, etc. (per stay) $10 $10
Costs
Fixed Cost
Hotel Property (Monthly) $440,000 $455,000
Management, Staff & Overhead (Monthly) $125,000 $145,000
Variable Cost
Room cleaning & laundry (per night) $14 $18
Services (per stay) $15 $15
Stats
Forecast Bookings per night
Worst Estimate 130 100
Best Estimate 145 160
% of Bookings are Business 40% 70%
% of Bookings are Leisure 60% 30%
Rooms per hotel 200 200
Nights per stay

Business Booking - Avg. nights per stay 2.5 2.5
Leisure Booking - Avg. nights per stay 3 3

Case

Uploaded by

Copyright:

Available Formats

Case

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Case

Uploaded by

Copyright:

Available Formats

Non-Disclosure Agreement

Map of Current and Proposed Locations

Opportunities for Growth

Nights per stay

You might also like