Army Hotel
Practice this intermediate market entry case interview question from McKinsey in the Retail sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
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.
Clarifying Information
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.