2. The hotel is in poor condition

3. A large percentage of rooms is unutilized

4. A complicated ownership structure obscures the business operationsSo the key question is: How can Krieg Corp. utilize its core competencies to reposition BSH more profitably in the market? <br />Suggested solution<br />Krieg Corp. has significant expertise in refurbishing buildings. Refurbishing the BSH should be prioritized. To take advantage of the full profit potential of BSH, Krieg Corp. needs to maintain the hotel operations, however, increase the focus on office space. By hiring new professional hotel management and outsourcing additional hotel services, Krieg can rely on its core capabilities only. BSH should be repositioned as BSBC, targeting mainly business travelers. The office complex should be integrated as part of the additional service offer of the hotel. <br />Future revenue projection<br />146053810The best, most likely and worst case scenarios are derived from BSH’s current revenue streams and occupancy rates. They also include the estimates for the costs of refurbishing the hotel complex. The refurbishment costs of approximately $7.5 million are estimates derived from renovation costs incurred for similarly sized hotels. The future revenue projections include a 30% price increase (industry standard) for office rental. The strategic shift towards an office space expansion is also taken into account. Worst, most likely and best case are based upon variations of the hotel occupancy rates and a hotel room price of $250 per night.<br />Critical Success Factors<br />The most critical success factor for BSBC will be making the operations more transparent with regard to management practices and above all, ownership structure. It will be crucial for Krieg Corp. to hire a lawyer that solves the legal issues surrounding the leasing and supplier agreements of BSH. BSBC needs to establish business relationships with the international corporations leasing their office space, in order to attract international customers. <br />Despite the large refurbishing costs incurred by the corporation, BSBC will be the most profitable solution. Over the five year holding period, Krieg can significantly increase the return on the investment by exploiting all market opportunities in the hotel and office segment. <br />