Just because revpar and profits are up, it doesn't mean that now is the time to rest on your assets. There's still a lot to do.
Since 11 September - or rather the US-led world recession that hit the UK in June of that year - hotel companies have had their heads down and their hands full as they attempt to:
- Cut costs
- Rejig personnel
- Cut rates n Offer deals
- Finish that project!
- Make excuses
- Sell the odd asset
- Pacify the shareholders - especially verbose troublemakers who think they can do better.
Now things are finally looking up. Revpar is up slightly, the restaurants are doing OK, there's more demand for function rooms, staff have been slimmed down, and there's a higher proportion of income from the budget operations. The hotel companies are fit, like an athlete at the beginning of the season.
But there's still one major problem to be dealt with. Too much of the shareholders' funds remains tied up in high-value assets and the shareholders keep comparing performance against this investment.
So there's still one other important job to do - "sort out" the assets so the improved performance can be judged favourably and comparatively. This is where Fleurets predicts greater activity as hotel companies prepare to:
- Sell bad performers.
- Get new projects earning soon.
- Increase investment in properties that produce a higher EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation).
- Become imaginative in refinancing trophy and high-value assets by:
- Sale and leaseback.
- Management contracts.
- Exploring opportunities with REIT (Real Estate Investment Trust) investors.
At Fleurets' hotel division we look forward to the challenge.