Case Interview Question #00266: Our client Century 21 Real Estate LLC is a real estate agency based out of Los Angeles, California. It focuses on managing and renting apartments for short-term contracts and temporary leases: our client rents the entire apartment building for 5 to 10 years, furnishes the apartments and rent each of them to its clients for a short period of time (usually shorter than 1 year). Its own clients are usually corporations (that rent apartments for expatriates or temporary transfers) and people from the entertainment industry (movie stars, pop singers, etc). The company currently has $750M in revenues but only $12M in EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization). Bain was hired to help them increase the EBITDA to $34M. What are the possible recommendations?
- Fully-owned maintenance and cleaning services are charging 20% premium over market.
- Client does not own properties, they are all long-term leasing contracts.
- Decentralized procurement.
- There is no price discipline.