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How a managed hotel in Riyadh splits its profit

You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.

Case timer

00:00

Target length:

1. Read the prompt aloud

Read it slowly, then pause. Let the candidate ask questions before they structure.

An illustrative managed hotel in Riyadh has total revenue of SAR 100 million a year and a gross operating profit (GOP) of SAR 35 million. The operator charges a base fee of 3 percent of revenue and an incentive fee of 8 percent of GOP. The owner also sets aside 4 percent of revenue as a reserve for furniture, fittings, and equipment (FF&E). What does the operator earn, and what is left for the owner before property tax, insurance, and financing?

2. Answers to clarifying questions

This case has no scripted clarifying answers. Answer from the prompt, and say "assume what you think is reasonable" if the prompt does not cover it.

3. A model structure

Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.

Owner's cash = GOP minus base fee minus incentive fee minus FF&E reserve
- Operator: base fee on revenue, incentive fee on profit
- Owner: what remains after fees and the reserve

4. The working, step by step

Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.

Step 1: Base fee
What a strong candidate does: 3 percent of SAR 100 million.
Base fee (SAR millions): 100 × 0.03 = 3
Step 2: Incentive fee
What a strong candidate does: 8 percent of GOP.
Incentive fee (SAR millions): 35 × 0.08 = 2.8
Step 3: Operator total
What a strong candidate does: Base plus incentive.
Operator fees (SAR millions): 3 + 2.8 = 5.8
Step 4: Owner after fees and reserve
What a strong candidate does: GOP minus fees minus 4 percent of revenue.
Owner cash before property costs (SAR millions): 35 - 5.8 - 100 × 0.04 = 25.2

The recommendation to listen for

At the end, say: "The CEO walks in. What is your recommendation?"

The owner should judge this hotel on the SAR 25.2 million it keeps, not on the SAR 35 million of GOP, because the operator takes SAR 5.8 million in fees and 4 percent of revenue goes to the FF&E reserve. First, the operator's base fee of SAR 3 million and incentive fee of SAR 2.8 million come with almost no capital at risk. Second, the owner has paid for the building, so its return is the SAR 25.2 million set against what the hotel cost. The risk is that GOP falls while the base fee stays. As a next step, compare the SAR 25.2 million with the cost of the building.

Score the candidate

Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.

This case has no exhibit. Score Exhibit reading on how the candidate used the data you gave them: did they pick out the number that matters and say what it means?

Structuring

1: No clear structure, or a memorized framework that does not fit the problem.
3: A sensible structure, but with some overlap, a gap, or no clear priority.
5: A structure built for this problem, with no overlap and no gaps, a stated hypothesis, and a clear first step.

Math

1: Frequent errors, no units, or needed heavy help to finish.
3: Right answers but slow or messy working, or one error caught late.
5: Accurate and clearly narrated, with units, a sense check, and what the number means.

Exhibit reading

1: Read the chart aloud without finding the number that matters.
3: Found the key number but gave only part of the so-what.
5: Pulled the right number quickly and said what it means for the case.

Synthesis

1: Summarized what was done, with no clear answer.
3: Gave an answer, but with weak reasons or no next step.
5: Answer first, then two or three reasons with numbers, the main risk, and next steps.

Communication

1: Hard to follow: long silences, no signposting.
3: Clear most of the time, with some rambling.
5: Calm and concise, signposted each step, and checked in with the interviewer.

Total

0 out of 25

Score all five criteria to see the band and the feedback template.