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Medium Go-to-Market Strategy Financial Analysis Capital Investment

Melt That Snow

#Public Sector #Government & Public Sector #Infrastructure #Tourism
ProHub Comment

This case requires candidates to build a financial model around tourism revenue projections and compare against capital and operational costs to assess ROI feasibility. The critical calculation involves breaking down revenue streams (event weeks, non-event days, store royalties, plowing cost savings) and determining if the $10M upfront investment can be recovered within 6 years given $2M annual revenue and $50K maintenance costs. The brainstorming component adds strategic depth by requiring discussion of non-financial factors like environmental impact, public perception, and operational risks.

Estimated Time 15 minutes
Difficulty Medium
Source ROSS
50 / 100
The city of Holland, Michigan, is considering building a heated walkway with 690,000 sqft of heated sidewalks and streets complementing the already existing 190,000 sqft of private walkways. Through this project, it is aiming to establish the largest publicly-owned snowmelt system in North-America. Holland is famous for its tulip festival, which attracts up to 2 million visitors during the summer weeks. However, the winter weather can be harsh, sometimes dropping to 20 F. With the new snowmelt system the city is looking to increase tourism year-round. The city believes that its 3 main winter events (Magic at the Mill, Kerstmarkt, Parade of Lights) will attract at least 3000 new visitors per week during each of these events, and 100 visitors per day during non-event weeks. This will increase the taxes collected in the city as it improves economic activity. The city wants us to evaluate the potential of this initiative.

Clarifying Information

  1. Objective: The objective of the city is to break-even its investment in 6 years.
  2. Current system: The current system uses snow removal with plowing. However, snowmelt systems offer a more efficient, reliable, and sustainable solution for snow/ice removal compared to traditional snow plowing methods which costs 10¢/sqft
  3. Current revenues for Holland: Hotel, restaurant and tourist shopping, tourism event revenue generation.