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City Centre 200 Bedroom Hotel Major Refurbishment & Repositioning

In November 2011, Focus Hotels Management was approached by an institutional investor to take over a 200 bedroom branded 4 star city centre hotel subject to a CVA.

The Issue and Solution

  • The CVA provided for the owner to either take the hotel back or accept a much reduced rent.
  • The rent reduction was not acceptable to the investors and did not reflect the hotels potential to generate rental profits.
  • The hotel was in need of capital investment but was trading reasonably well.
  • Revenues and profits had been on a downward cycle for a number of years.
  • Focus agreed to buy the existing lease with a new arrangement on rent and with terms similar to a management contract.
  • Focus acquired the hotel lease and took over the management in October 2011.

Operational Overview

  • Implemented a full review to understand how existing performance could be improved without significant capital.
  • Reviewed the long term development of the business.
  • Reviewed the following areas:
• Fabric of the property
• The branding
• The management team
• Revenue and sales management
• Operational review

Established

  • Experienced management team in place who understood their market.
  • Were losing room rate and some market share.
  • Revenue decisions were made off site at group central office with little local management involvement.
  • Significant level of complaints about the quality of the beds.
  • Hotel was tired but clean and well maintained.
  • Existing brand did not deliver and there was a difficult relationship with the owning company.
  • Hotel had a loyal following which was declining, or rate was being discounted to retain it.

The Quick Fixes

  • A key issue was identified with regards to the quality of the beds. All beds and associated bedding were replaced immediately.
  • Installed revenue management and reservations teams based at the hotel, supported by Focus’ central revenue teams.
  • Provided them with the necessary yield tools to enable them to compete in the local market.
  • Developed a revenue and yield culture enabling the hotel to compete effectively.
  • Set up short and long term revenue and profit related targets.

Long Term Business Development review

  • A full review of the existing branding and the capital required to maintain the brand took place
  • Reviewed all other brands to establish if an alternative would better protect the business.
  • Research indicated that the DoubleTree by Hilton brand was best.
  • Conversion to this brand involved a full refurbishment.
  • Projections justified this investment and was fully supported by the investor and funding provided.
  • Negotiated the brand with Hilton including all PIP requirements.
  • Project commenced in October 2012, managed by the Focus property team.
  • Live under the DoubleTree brand on 1st May 2013. 

Achievements

  • In 2012, Focus improved the occupancy by 10% on the prior year (pre Focus Management) while maintaining average room rates.
  • Achieved whilst the hotel bedrooms were being refurbished during the last 3 months of the year.
  • In the first 4 months of 2013, hotel trading was, as expected, significantly reduced at the peak of the refurbishment programme while all areas were under refurbishment, although the hotel continued to trade with little negative guest feedback.
  • Opened as the DoubleTree brand on 1st May 2013.
  • Redevelopment project delivered on time, on budget (significantly below the budget plan produced by the brand and the previous owner) and above brand expectation and requirements. Focus and its investor believe the hotel will compete at the top end of the city market and generate the profits justifying the investment made.
  • The hotel had an outstanding trading year in 2014, performing both above budget and significantly above the expectations of the owner. The hotel is now one of the top performing hotels in the Bristol market in both occupancy and RevPAR. The profit performance of the hotel was at year 4 of the 5 year plan given to our investors for conversion from Ramada to Doubletree.
  • 2016 exceeded budget and 2017 is on target to be a very successful year, ahead of all budget plans and the hotel continues to trade as one of the top performing hotels in the city.
  • The STR RGI (Revenue Generation Index) of the hotel continues to perform at 100%+ of its competitive set.