Case study: Transport, logistics and leisure
Hotels & leisure business case study
Defining strategy & restructuring a business for growth
Challenge
Our client was a leading mid-market hotel owner and operator in the Indian Ocean region. The company was owned by a listed diversified holding company as well as the two founding families who held substantial minority stakes in the business.
The company had enjoyed strong growth through development and acquisition of new sites and the roll-out of its brand and operating model. In addition to the core mid-market portfolio, a new luxury hotel had been built that was delivering strong financial performance.
Corven was asked to provide advice to the company on how best to position for the next stage of development, being the roll-out of the luxury brand and continued growth of the mid-market range. In addition to this, the Managing Director was looking to withdraw from the business and realise some of the financial value from his family’s shareholding.
Approach
The original mandate was to raise development finance for the company but following an initial review of the business it was clear that a strategic review was required in order to prepare for a new investor. This included a detailed analysis of the historic and forecast financial performance of the company as well as its capital expenditure plans. Forecasts were prepared on both a base case and growth case basis and the balance sheet was also reviewed.
Corven assisted the management team in defining and articulating their strategy and engaged the shareholder board in the process to ensure all stakeholders were aligned. A number of recommendations were also made to improve the performance of the business, primarily around the management team and financial control.
In order to prepare for the raising of new finance, Corven created an investment plan and presentation and coached the management team on how best to present the business.
Results
The project resulted in a clear strategy for the business to focus on the roll-out of its brands in the domestic market rather than the previous intended international expansion strategy. The investment requirement was determined to deliver the pipeline of projects that the business had developed to grow the portfolio. In the end, we advised that the company should raise the necessary development capital from existing shareholders and as such a rights issue was subsequently successfully executed.
During the project the Managing Director decided that he wished to leave the group for personal reasons and as such, two of the hotels were hived-out in return for his equity stake. A new Managing Director was recruited leaving the business positioned to implement the new strategy for growth.
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