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Project Shakespeare

Appointed by an investor who had identified a hotel asset to acquire

Project Shakespeare

Assignment

Assured Hotels (AH) were appointed by an investor who had identified a hotel asset to acquire, to assist in offering pre-acquisition due diligence ahead of exchange for a fixed fee, as the purchasing investor had no previous hotel sector specific experience. This case was referred to us via one of the main sector property agents.

Scope

The purchaser agreed a period of exclusivity for us to work the DD, the asset on the market was a 70-bed full service unbranded hotel in an affluent town just south of Birmingham. Initial scope for the pre-acquisition DD included:

  • Sales and marketing review of current and potential - pricing strategies, routes to market as well as producing, lapsed and potential key accounts. Analysis of the competitor set was key in justifying any CAPEX plans and ROI feasibility in projected bedroom rate and occupancy growth.
  • Operational review across the management and staffing structure, compliance, licensing, procurement and every aspect of the day to day running of the trading business. HR review and sight of staffing contracts was important to understand liabilities on contractural terms, to advise the purchaser on TUPE measures.
  • Finance review of historic performance, so that we could establish a 5-year trading projection model. This needed to demonstrate trading uplift linked to better sales process and CAPEX ROI, to also include stress sensitivities and covenant testing on profit projections for funding applications.

The vendor was very cooperative in allowing the purchaser and AH access to the management team, required records and data, allowing us to achieve the agreed outputs of our scope. Additionally, AH were asked to look at funding options via our banking contacts, which we were successful in achieving.

Outcome

Contracts were exchanged on time at the end of the period of exclusivity, with an agreed completion date in early 2019. During this period AH have had a further scope added to our appointment, in providing a pivotal role in managing transition – a role that should not be underestimated as there were operational and compliance issues requiring solutions to achieve completion.

A further benefit from this work leaves AH in an informed position on the property, and well placed to support on site management and the new owner in an asset management capacity in the longer term, ensuring a smooth transition to maximise returns for the key stakeholders.