IBD London: A Developed Country assignment doesn’t protect you from uncertainty, chaos, and self transformation
EWMBA students Arun Arunagiri, Ben Kagonyera, Sharon Kam, and Pavithra Krishna spent two weeks researching the feasibility of a startup budget hotel investment in Central London for a group of investors.
Hi! We’re team RIU — an enthusiastic bunch hailing from the US, India, and Uganda!
We’re a diverse team who had never met each other prior to the IBD course, but working together came very smoothly almost immediately since we all had the same goals in mind — to work together harmoniously and to do the best job for our client. We also were brought together by the fact that we knew that the most valuable asset from this class would be the insights and perspectives from each other.
Getting to know each other and the client was pretty easy — we sought to help our client develop a business plan to enter the budget hotel market in Central London. In reviewing the research, though, we were overwhelmed with the amount of information and the depth of our ignorance — ARR / RevPar / ADR — what were all these terms and, more importantly, how could we master our knowledge to bring something thoughtful and meaningful to our clients?
Day of arrival presentation & Hypothesis pivot
What a pleasure it was to meet our clients in person! For the first full comprehensive presentation of our initial findings, our client set up a meeting with several of his contacts, including a hedge fund investor and the Head of Business Development for Four Seasons Europe. Given our position in Silicon Valley and our preliminary research, we were able to provide some insightful commentary on the impact of the shared economy and potential impact of AirBnb. Our core studies helped determine and analyze key metrics to focus on with regard to supply and demand metrics and how it would impact the potential markets for hotels and hospitality.
Our financial analysis of the current business model, however, remained unclear. Given the high prices of real estate in London, would our client be able to overcome the required hurdle rates for them and their investors?
Our first conversations in a pub in central London would shape the research in the ensuing days, which included touring dozens of hotel rooms in targeted areas and interviewing hotel managers, owners, research analysts and industry experts. Our days of research and interviewing were intense, exhausting, as well as exhilarating — we were able to meet and interview and learn from a variety of perspectives and personalities amongst one of the most diverse cities in the world.
But in tandem with our research was the opportunity to learn more about London as tourists — for three of us it was the first time venturing into Europe! We got to partake in cultural events such as watching the sunset from the London Eye, enjoying high tea, and enjoying some of the best chicken we’d had in a city notorious for the lack of food options.
At the end of our research, at day 9, we’d finally come to some difficult, but conclusive insights. First and foremost, the London market would not sustain profits necessary to attract investors and necessary returns for the proposed budget hotel model. While the term “pivoting” on an original idea is one that is thrown around pretty often in Silicon Valley, it presented an intimidating challenge halfway through our in-country experience. Feeling somewhat deflated, many questions circled our team at this tenuous juncture: how could we pivot in a way that could reframe the proposal into one that would work for our client? Given this initial setback, could we reconcile what we’d done out of country to the expectations in country? In light of time that was passing faster and faster, how could we help the client get the most of our time? Getting to know the clients better and seeing them not just as clients, but as real people who we wanted to help only increased the sense of urgency of the task at hand.
The remaining days we saw our directives and work change as a team to meet the uncertainty of the work before us. We learned to fully trust and depend on each other. We learned to recognize that obstacles were inevitable, but that together we could work through them. Most importantly, we learned that we could come together as a team more strongly than we could produce individually.
The final presentation
It took days of additional research, late nights, and a relentless search for truth, (which harked back to the initial “Viking” experiment we had in class, which implored us to focus not on all information, but rather the most pertinent information). We presented in front of our clients and a leading industry analyst in the hotel and hospitality space on our final insight findings and how the client could re-approach their investments in the hospitality sector to achieve a richer return that would satisfy their initial return requirements. This discussion led to a final reframe of approach, and we celebrated as a group at the end of our two weeks over dinner and a beautiful walk through London with our client and their families.