Acquisition of Hotels on Behalf of Overseas Investors

Opportunity

  • Focus Hotels Management was approached in early 2014 by a group of investors who were interested in investing in the UK hotel market.
  • The investors aim was to build a small portfolio of quality 4 star country properties where UK bank funding was sourced by the operating company with the overseas investors providing the balance of the investment and working capital.
  • The investor’s objective was to realise investment returns both cash on cash and in property appreciation of a minimum of 15% per year.
  • Focus Hotel Management contracted with the investors to execute this objective and set about identifying suitable properties and funders.

Project One

 

  • The 1st property was identified in mid-2014 - a 90 room branded country house hotel and spa in Shrewsbury which met all the investors’ criteria. The property was trading well, but was in need of capital injection to reposition itself in the local market.
  • Focus Hotels Management completed the acquisition of this property in November 2014 and immediately put in place the planning to refurbish the hotel which was executed through 2015 and early 2016.
  • Focus Hotels Management immediately set out a plan to reposition the hotel which included changing significantly the spend in both the wedding and spa business market.
  • Focus Hotels Management planned the following to help facilitate:
A. A full upgrade of the existing spa facilities. Adding to these facilities were additional treatment rooms, a new relaxation suite and a dedicated spa reception with associated nail and foot treatment areas.
B. A full makeover of the main wedding facilities including 2 new bridal suites and a space for outdoor weddings.
C. A full makeover to all public areas including creating a new lounge in the existing bar and extending it into an unused back of house area creating a much larger, more versatile and more enhanced facility. 

 

The Result

  • In 2015, the hotel increased its operating profits by over 20% despite significant areas of the hotel including the main wedding suite, leisure club and spa being out of use for a six week period with the knock on impact of all associated revenues being lost.
  • Focus Hotels Management has implemented a strategy to recover and improve the wedding market segment of this newly acquired hotel. A lack of booking prior to the acquisition led the hotel to suffer a 30% reduction in the number of wedding bookings in 2015.  Since the refurbishment and local marketing activity, the hotel is recovering well with the overall bookings and wedding spend showing an increase. The hotel is on target to be back to its pre-refurbishment number of weddings for 2017 but with significantly higher associated revenues.
  • In 2017, the hotel is on target to continue its improvement in profits.
  • The business is fully meeting and exceeding the proposals put by Focus Hotel Management to the investors and in line to exceed their objectives and expectations.

 

Project Two

  • Focus Hotels Management identified a second property for the same overseas investors in mid 2015 and completed its acquisition in December of that year.
  • This property has:
  • 95 guests bedooms all en-suite
  • 4 spa and treatment rooms
  • A fully equipped leisure club with over 1000 members
  • High quality conference & meeting facilities
  • Wedding and events venue holding over 100 local food and drinks related functions
  • Focus Hotels Management commenced a £2m capital programme to upgrade this property in January 2016.
  • Despite this business interruption, the hotel performed very well and was ahead of the first year financial projections agreed with the investors.
  • For 2017, the hotel is significantly exceeding all its targets.