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BCG Hard Growth Strategy

Big Fat Greek Problem

#Retail #Real Estate
ProHub Comment

This is a sophisticated growth strategy case that requires candidates to synthesize quantitative analysis (per-unit revenue trends), market research (hotel competitive positioning), and financial modeling (renovation ROI). The key challenge is recognizing that total revenue stagnation masks underlying portfolio weakness in small units while larger units grow—a pattern that points to market segmentation opportunity. Strong candidates will identify the hotel market gap for larger groups and validate the renovation thesis before recommending capital allocation.

Estimated Time 37 minutes
Difficulty Hard
Source Duke
38 / 100
We are back in 2018, and your client is AthensStay, a real estate management company located in Athens, Greece. Three years ago, AthensStay shifted its focus toward short-term apartment rentals, offering units through platforms such as Airbnb, VRBO, and Expedia. The company now operates a network of 75 apartments across central Athens. 30 of these apartments are owned directly by AthensStay, while the rest are managed on behalf of third-party owners under a 25% commission structure. While the first 2 years were financially promising, last year’s financial data shows a stagnation in revenues, despite steady growth in overall tourism in Athens. The company’s CEO has asked you to: • Diagnose the reasons behind this revenue decline. • Recommend a strategy to restore growth and profitability.

Clarifying Information

  1. Model: The company focuses on real estate management of Commercial, Residential, and Touristic properties. Recently, they entered the short-term rentals market without prior experience. Remember, we are in 2018, when this industry was still nascent. AthensStay owns 30 apartments and manages the remaining 45 under third-party contracts. For managed apartments, the company receives a 25% commission on revenues, while all costs are borne by the owners.
  2. Competition: There are not yet major players or large investor influxes into the short-term rentals market.
  3. Goal: The company’s strategic goal is to restore historical performance, bringing occupancy rates back to healthy levels and re-establishing revenue growth.
  4. Constraints: There are no financial or budgeting constraints, since other business areas are highly profitable. Leadership is willing to invest to grow the short-term rental business, which they see as a major future opportunity.
  5. Geography: They work in Athens only.
Mock Interview
Interviewer

We are back in 2018, and your client is AthensStay, a real estate management company located in Athens, Greece. Three years ago, AthensStay shifted its focus toward short-term apartment rentals, offering units through platforms such as Airbnb, VRBO, and Expedia. The company now operates a network of 75 apartments across central Athens. 30 of these apartments are owned directly by AthensStay, while the rest are managed on behalf of third-party owners under a 25% commission structure. While the first 2 years were financially promising, last year's financial data shows a stagnation in revenues, despite steady growth in overall tourism in Athens. The company's CEO has asked you to: • Diagnose the reasons behind this revenue decline. • Recommend a strategy to restore growth and profitability.

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
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Practice this case with AI Mock Interview

AthensStay, a short-term rental company in Athens, faces revenue stagnation despite tourism growth. Analysis reveals that smaller apartments (2-4 guests) are underperforming while larger units (6-10 guests) grow steadily. The hotel market shows limited supply for groups of 6+, presenting an opportunity. The recommendation is to renovate small apartments into larger units (2-4 guest → 6-8 guest), which generates the highest financial return (€450K first-year net revenue) and captures unmet market demand.

Key Insights:

  1. Per-unit revenue analysis reveals the true problem: total revenue masks underperformance in small apartment segment while large apartments thrive
  2. Competitive market analysis (hotel occupancy by room type) identifies the strategic opportunity: hotels underserve groups of 6+, leaving demand AthensStay can capture
  3. Renovation economics must account for both owned units (full revenue capture) and managed units (25% commission only) when calculating ROI and prioritization
  4. Portfolio reconfiguration (converting small to large units) is more attractive than pricing adjustments or competing on amenities given the clear market segmentation