Luxury Dorms

Case Prompt

Your client is the owner of Dormitory Co; a chain of dormitories located in major Chinese cities. Growth for Dormitory Co has been stagnant over the past several years. The new owner of Dormitory Co has seen a lot of press about significant growth in luxury dorms and wants to know if she should consider transforming her dormitories into the luxury dorms.

Background Information

• Luxury dorms are a cross between dorms and boutique hotels. They can include perks such as more private bunks or rooms, trendy amenities, regular maid service, tech savvy features, etc.
• All dorm locations perform at the same level financially.
• The owner’s goal is to increase profitability.

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General response summary

Framework Guidance

• The candidate should convey that they need to understand current financial performance of the dorms, cost to upgrade to a luxury dorm, and expected financial performance of the dorms. They should also highlight qualitative factors that need to be considered.
• An NPV analysis will be required