Case study 1
10 hotel project
Our company was approached by an Institutional Investor with ten properties in his possession in order to discuss their management before the incumbent tenant went into administration. The investor was only allowed to be involved as a shareholder in the operation of the companies, so we bought the leases from the administrators and implemented new lease structures. Before taking over, Amazon Investments carried out a full review in order to identify the primary issues and operating efficiencies, so as to then implement plans to address them.
These plans included:
- Restoring the hotel’s original name
- Management and staff training
- External and internal clean-up operation to improve first impressions upon arrival
- A major national sales and marketing campaign with several key agencies
- Quick fix limited capital programme for immediate returns
- Implementation of identified operational efficiencies
- In 2009, the hotel’s portfolio traded profitably net of all costs.
- In 2011, revenues went up by 35% and profit increased by an impressive 70% and within the next two years, revenues continued to grow by a further 14% and net EBITDA profits by 53%.
- By the end of 2014, like for like revenues improved by a further 10% and profits grew by a further 21%, while 2015 was on target for further profit uplift.
- Initial agreement for 5-year leases were subsequently extended to 10-year terms.
Case study 2
60-bedroom Hotel and Spa
In 2007, Amazon Investments was approached by the owner of a 60-bedroom hotel with a 2,000 member leisure club and spa, which was previously leased to another hotel brand and returned to its owner in 2005. A managing company had been previously appointed but it did not perform to the owner’s expectation. The property was trading at good revenue level but was making substantial operating losses of more than 200 thousand pounds. When our company took over, it carried out a full review in order to identify sales, marketing, staffing, purchasing and operational efficiencies and then put plans into place.
These plans included:
- Replacing the existing hotel management team
- Contracting out housekeeping, implementing training and KPI’s
- Renegotiating all existing purchasing contracts
- Establishing new relationships with key business and leisure agents
- Repositioning marketing strategies in the local and national markets
- Despite the 2009 recession, hotel was trading at a profit of more than £170K and continues to trade successfully with one of the highest REVPAR’s in the market despite its secondary location.
- Spa and Leisure team significantly increased the membership base by over 500 members.
- Occupancy has grown by over 20% within 7 years, with average room rates increasing by about 17% in the same period.
- Fully refurbished and planning to add 40 bedrooms to the property agreed with the owner, who was so happy with our management that he agreed to extend our contract for another 5 years.
- In 2013, the hotel was awarded a TripAdvisor Certificate of Excellence, which is only given to the top performing 10% of businesses listed on the site.
Case study 3
200-bedroom Airport Hotel
Amazon Investments was approached by a private investor in 2011 to take over a 200-bedroom, 4 star hotel situated next to one of the UK’s busiest airports. The hotel had opened in 2008 but did not trade well and was performing significantly behind its competitor set. It was also subject to the CVA, which provided for the owner to either take the hotel back or accept a much reduced rent. The owner, however, could not accept the latter since the reduced rent would be insufficient to cover financial commitments. Our company acquired the hotel from its administrators and took over management in late 2011.
After a full review of the business, it was established that the underlying issues were with the group central management, which was making decisions without consulting local management, pricing the hotel outside its proper competitor set and running operational costs high without implementing efficiencies in line with hotel performance. Amazon Investments installed a new revenue management and reservations team based at the hotel and provided them with necessary yield tools so that they can effectively compete in the local market. We also believed the hotel would benefit from new branding, so we renegotiated with a well-known brand and went live in 2012.
- Improved performance from the previous year by increasing gross revenue by 23%, while REVPAR increased by 29% and EBITDA increased by 30%. Occupancy also improved by more than 20% compared to the previous year.
- Within the next two years, the hotel continued to trade well with an increase in revenue of 30% compared to 2012, while EBITDA grew exponentially by almost 55%.
- In 2015 the hotel was on target to continue its revenue and profit growth, with its STR RGI (revenue generation index) continuing to perform at 100% of its competitive set.
Case study 4
City Centre 200-bedroom Hotel Refurbishment and Repositioning
Amazon Investments was approached by an institutional investor in order to take over a 200-bedroom, 4-star branded hotel subject to a CVA which provided for the owner to either take the hotel back or accept a much reduced rent. The owner, however, could not accept the latter since it did not reflect the hotel’s potential to generate rental profit. The hotel was in need of capital investment and revenues and profits had been on a downward spiral for a number of years, but it was trading reasonably well.
Our company agreed to buy the existing lease with a new arrangement on rent and took over management of the hotel in 2011. We then implemented a full review of existing performance of the property, the management team, revenue and general operating efficiencies in order to evaluate the long-term development of the business. We established that the hotel was tired but clean and well maintained, with an experienced management team in place that understood their market. However, there was a significant level of complaints about the beds’ quality and the hotel’s loyal following was declining, or the room rate was being discounted to retain it.
- A full review of the existing branding and the capital needed to maintain the brand indicated that an alternative brand would better protect the business, but conversion to this brand involved a full refurbishment. The refurbishment was handled by our team in 2012, during which we managed to improve occupancy rates by 13% while maintaining average room rates.
- The redevelopment project was delivered on time, significantly below the budget plan and above brand expectation and requirements.
- In 2014, the hotel had an outstanding trading year, performing above the expectations of the owner and is now one of the top performing hotels in the city in terms of both occupancy and REVPAR.
Case study 5
107-bedroom Country Hotel
Our company was approached by the owners of the hotel with a view of taking over the management of the hotel from the existing management company due to the hotel’s poor performance. Amazon Investments took over in 2013 and carried out a full review, identifying management and general operational inefficiencies. A new general manager was appointed and plans were put into place to turn the hotel’s performance around as quickly as possible.
- By the end of the year, our company had increased the hotel’s EDITDA profit by approximately £150K.
- Within the next year, profits increased by a further 40% and based on this performance, a full refurbishment was agreed. Following that, the hotel was on target to achieve its best year since it opened, with EBITDA improved by more than 20% and its customer base, sales and profitability continuing to grow.