This case tests the candidate's ability to structure a market entry decision through financial modeling. The key challenge is identifying that capacity constraints during peak periods significantly reduce projected revenue from $7.8M to $7.2M, extending the breakeven period beyond the firm's investment hurdle. The case rewards structured thinking, attention to operational constraints, and the ability to synthesize financial analysis into a clear recommendation.
The purpose of the hotel is to provide housing for: • Soldiers attending training at the base • Soldiers with temporary transfers to this base
If asked, provide the candidate with the following information:
Competition • There are three existing hotels near the base and each are approximately 20 miles away from it. The nightly rates for each hotel are: – Hilton ($110/night) – Hampton Inn ($75/night) – Days Inn ($40/night)
Occupancy – There are two training classes held at the base: • Basic Officer Training: 200 soldiers per class; class lasts 10 weeks and is held 5 times per year. • Advanced Officer Training: 50 soldiers per class; class lasts 4 weeks and is held 10 times per year. – Temporary housing: Soldiers are transferred every 3 years and are given 15 days to find a permanent place to stay. There are 9,000 active duty soldiers subject to this rotation.