In October 2014 AH commenced management of the Cedar Court group for a fixed term in order to improve the business as a whole. The group of 4 hotels in West and North Yorkshire consisted of almost 600 keys, multiple F&B/ events outlets and 3 leisure clubs generating £15m net annual turnover. Our approach to support the existing group name rather than place our brand above the hotel was a key point when making the final decision against other UK management companies in the competitive tender.
Our approach was principally across three streams, firstly to grow income as much as possible to deliver the maximum EBITDA growth in the 3 years of our tenure. Secondly the stakeholders supported us with a CAPEX budget which was equivalent to circa 5% of annual turnover. CAPEX was a contractual responsibility of ours to manage, prioritising this fairly across the group, using feasibilities to identify where the best return on this investment could be achieved.
Our contract gave AH the following detailed responsibilities.
- our approach and assessment of the group's strengths and weaknesses
- the timescale within which the findings would be reported, and the basis and format of reporting back to the stakeholders
- the overall operational management of the Group
- the finance function (ensuring the production of all KPI data and reporting to hotel net operating income level)
- purchasing/procurement (currently limited/inadequate systems)
- developing and implementing capex program of works within agreed budgets
Finally the exit for the family was a clear objective. However, we agreed that this would not be shared with the hotel management team until appropriate. We therefore set about running the business as any other full time Hotel HMA, until the spring of 2017 when the hotels were marketed for sale by Christie and Co.
The stakeholders exited the business in early November 2017 with completion of the sale as an asset purchase to a new private investor for just over £30m, re-paying all of the banks £20m exposure. The market valuation of the assets when we were appointed in 2014 was £18.4m with the banks' exposure over £24m. The new debt now sits with NatWest.