1/20 De-Risking Hotel Acquisitions Thread 2: Business Plan, Top-Line
We’ve already talked a bit about underwriting, both top-line and expenses, but here’s where we’ll try and connect the numbers to actual business planning.
We’ve already talked a bit about underwriting, both top-line and expenses, but here’s where we’ll try and connect the numbers to actual business planning.
2/20 Each potential acquisition presents a different turnaround story, and those stories are myriad and varied. For our purposes, we’ll try to hit on a wide variety of items that will help us find and confirm our turnaround story. This one will focus on Occ + Rate.
3/20 Once I’ve established where my post-renovation hotel should sit within its competitive set, I need to start finding the business to get there. What types of customers are in the market, and what drives them, are the first two questions I need to answer.
4/20 This requires a deep dive in to local market demand drivers, understanding corporate demand generators, leisure demand generators, and group demand generators in some detail. Who are the locally-based corporations bringing in customers / vendors / employees?
5/20 Who are the customers and vendors visiting locally-based corporations? Why are leisure travelers visiting here?
6/20 Are there leisure or corporate group gatherings happening (e.g. weddings, bar/ bat mitzvahs, quinceaneras, charity events, conferences, conventions, exhibitions, etc.)?
7/20 Each of these questions needs to be asked and answered broadly, and then more narrowly to address your contemplated price point.
8/20 Once you have answers for your price point, you need to determine whether or not you can effectively “steal” business from your local competitors at that price point, whether or not you can induce new demand at your price point, and whether there is unaccommodated demand…
9/20 …at your price point you can now handle. At this point, I need help to answer these questions.
10/20 Time for conversations with: Broker, Current GM and/or DOSM (if I can, while on tour), Brand rep, Brand’s sales folks, Mgmt Co rep, Mgmt Co’s sales folks, and anybody else who I can without violating my confi.
11/20 Among other conversations / information I’d like to have, it’s my goal to understand: (a) current top client list; (b) clients the hotel has gone after but been unable to get; (c) understand my “destination” brand’s unaccommodated demand in the market (honestly, this data…
12/20 …is crap 95% of the time but can be directionally helpful when evaluated in concert with other things); (d) understand my “destination” brand’s relationships and share of wallet with the local corporate set on a national / global basis; (e) understand my management…
13/20 …company’s relationships and share of wallet with the local corporate set regionally / nationally / globally (if applic.); (f) who are the influencers of local social business (think: wedding planners, not Insta) and what relationships do my brand and management company…
14/20 …have with those influencers; (g) plenty of other questions to ask.
15/20 With the answers to these questions, I can have a pretty good sense of how likely my Occ + ADR positioning is within the market, and I should be able to get – particularly from the conversations with the brand and operator – my strategy for targeting growth by segment.
16/20 E.g. “Plan for FAM trips immediately post-renovation for CW Travel since 50% of the target corporate clients use CW to manage their travel”, or “Most inbound leisure travel comes from [MARKET] so plan for a loyalty-program-based discount for members in [MARKET] early on…
17/20 …to build business”. I’ll also want to dig through the existing business to see what I want to keep and what I want to phase out, and work to develop a plan to keep the business through the renovation and transition.
18/20 On the group side, I’ll also want to do a bit more digging into how my physical renovation will help better position the hotel compared to its competitors, and how that may help me attract additional business.
19/20 An upgraded ballroom – with new carpet, wall covering, and lighting – can go a long way in driving social business, while an improved integrated technology package and more flexible seating / table options can drive corporate.
20/20 Part of my business plan will be to identify my new strengths and best determine how to go about marketing those strengths.
Tomorrow, we’ll talk F+B and other revenues. From there, we’ll spend some time on staffing.
Tomorrow, we’ll talk F+B and other revenues. From there, we’ll spend some time on staffing.
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