It comes as no surprise that the hospitality industry has suffered from the great World Cup hangover, resulting in a few casualties in the restaurant and hotel arena. One such hotel has been fortunate enough to escape liquidation thanks to the business rescue process. Unbeknown to many, Shelley Point Hotel, Spa and Country Club on the Cape West Coast has been under business rescue since July last year.
Neill Hobbs, a senior business rescue practitioner, who has been the business rescue practitioner for Shelley Point Hotel, stresses that one of the most fundamental aspects of a successful rescue operation is timing – applying for business rescue before it’s too late.
Fortunately for the West Coast hotel, rehabilitation has proved to be successful, largely as a result of the fact that the owners applied in enough time to introduce an intervention program and were prepared to inject capital to fund the rescue. Hobbs says that business rescue success ratios in South Africa could improve a great deal if business owners were made aware of the business rescue option as a preventative step and applied in due time.
Another key success factor at Shelley Point was the appointment of skilled people to review and restore the operational side of the troubled hotel. Hobbs stresses that stability through the business rescue process is most important and, in the case of Shelley Point Hotel, the expertise of hoteliers was paramount. “Hotel owners can find themselves in difficulty by believing that a hotel operates in the same way as a regular business. Management of a hotel, particularly through tough times, requires refined skills that come only with experience and, more importantly, knowledge of the dynamics of the industry as a whole. We knew that we had to outsource this aspect.” Hobbs appointed BON Hotels, whose team is known for successfully turning distressed hotels around, to take over daily operations.
A strong General Manager was appointed, which, according to Guy Stehlik, CEO of BON Hotels, is paramount to the success of any hotel. Stringent systems and processes which had been visibly lacking were immediately implemented. Procurement and buying procedures required urgent attention and BON corrected poor financial controls. Their initial findings revealed that Shelley Point’s staff complement was disproportionate and a restructure was necessary to improve productivity and profit margins.
Stehlik says that it takes an experienced hotelier to acknowledge and quickly address problems in good enough time to rescue the business and turn it around. “We have proved that in a very short time, we are able to make a significant difference to the bottom line. With an experienced set of eyes and a smart restructure, the damage can often be rectified in a matter of weeks.”
Shelley Point has seen a steady improvement and is beginning to break even. REVPAR (revenue per available room) is up 10% for the last six months. Not only has the process kept the hotel going, but it has also saved many jobs, kept creditors at ease and resulted in an attractive investment option. After the successful transition, the property has been purchased and was signed out of business rescue on the 30th July 2014. Stehlik says that BON Hotels have confidence that the resort will continue to improve and they are finalising a long-term strategy for the BON group with the new owner.