UK Boutique Portfolio

The challenge

Assist an overseas fund to acquire a portfolio of five hotels located around the UK.

The hotel had been trading for a number of years. The portfolio had been underperforming for quite a considerable time and in need of updating and modernisation.

Our client was looking to acquire the business with a view to upgrading the hotels, improving performance and exploiting further development opportunities using the land surrounding the hotels.

Overview

• A complex business review and due diligence was undertaken for all 5 hotels, creating a business plan to take the operations forward post acquisition.
• Audit review of the main hotel systems; property management, revenue management, central reservations, online booking, channel manager and price parity.
• Review of the operations, sales and marketing function, rate strategy and inventory distribution.
• In depth audit of the hotel interfacing in particular front and back office systems and improving the reliability of financial reports being produced.
• Understanding the system of forecasting and the reliability of data used to prepare the forecasts. Comparing analyses and interpreting actual as against forecast data.
• Reviewing the Food and Beverage operation and setting out a plan on how gross profit margins could be improved.
• Reviewing the associated land opportunities and considering the redevelopment possibilities.

Summary

Following our review of the business, we concluded that there was a lack of transparency in the financial numbers and the overall business operation. The vendors were extremely reluctant to share information and statistics on each hotels performance.

The lack of interfaced systems, led to inconsistencies, errors and omissions. Web bookings were confusing and inconcise, offering duplicate products. Furthermore, there was an extremely low conversion rate on web bookings. The underlying value that the vendors were seeking was considerably more than our financial review would suggest. We subsequently recommended to our client to abort the proposed purchase as this would not deliver value for money.