Strategy, restructuring, increased financing requirements due to Corona – this can only be solved with expert support – here, consulting and interim management go hand in hand – this is how restructuring in the hospitality industry can succeed!
The initial situation
A rural 4-star superior hotel with a focus on B2B business and business customers as its main target group, which had been established in the market for many years, was coming under pressure due to a changing market environment driven by new regional hotel openings. In addition, 2020 was characterized by massive impairments as a result of the Corona crisis – as was the case for almost all businesses in the lodging industry.
The hotel itself has about 100 rooms and apartments, which are also intended for longer stays.
In view of what is expected to be a permanent change in the market in conjunction with the increased number of competitors, it became necessary to adjust the company’s strategy. In addition, against the background of the economic situation and possibly necessary financing measures, the house bank expected the presentation of a reorganization expert opinion according to the IDW S 6 standard.
The task for consulting and interim management in the hospitality industry
The ability to continue as a going concern with regard to a possible risk of insolvency and the ability to restructure in light of the competitiveness of the company should therefore be proven by an external expert opinion. The ability to continue as a going concern is given only if the company is fully financed in the forecast period by the expert opinion. Competitiveness, on the other hand, requires appropriate results or returns.
Not at least due to the unforeseeable effects of the Corona pandemic, the expert opinion should be designed for a period up to 2022. But how to develop a viable corporate plan under the given, special forecasting difficulties?
This is where our sister company HANSE Management Consulting came into play. Together with the interim manager Christian Kracht, provided by HANSE Interim, they solved this difficult task.
However, the Corona pandemic still poses a major challenge to the world. In order to stop the spread of the virus and to let the curve of new infections subside, various measures were ordered and travel warnings were issued. As a result of these measures, the catering industry had to close, conferences and seminars were almost completely canceled by customers, and even the lodging business went and still goes towards zero.
Although corporate planning is always fraught with uncertainty, the general conditions for drawing up a restructuring report are much more difficult here and now. Nevertheless, even in these times, regardless of the effects of the Corona pandemic, the question of the company’s future viability must be answered: Can the company put an end to its economic slump by implementing a new strategic concept and achieve a sustainable return on investment through targeted measures?
The solution – consulting and interim management in hospitality
Together with the shareholders, the management and sales specialists from the hospitality sector, a comprehensive strategy paper was drawn up.
The strategy includes focusing the overall concept on the meta-theme of sports and outdoor activities, a significant expansion of marketing and sales activities, and supporting financing measures. The implementation of the strategic concept “Sport and Outdoor” in connection with the unique history of the hotel to be experienced, will increase the attractiveness of the hotel clearly and sustainably and thus create a real USP. The theme also appeals to a sufficiently large and growing target group with a corresponding willingness to spend, so demand should be assured.
After the creation of the product, targeted, lasting marketing is the decisive success factor. To achieve this, concrete sales activities and measures were developed.
However, the resulting planning continues to be overshadowed by the effects of the Corona crisis.
The following assumptions, supported by expert opinions, were incorporated into the plan premises. 1. city hotels and larger events are affected far longer by the crisis. 2. rural areas and their hotels recover more quickly.
The planning shows that the measures envisaged and the premises set with regard to the Corona impact will mean that the hotel business will in all probability achieve a sustainable economic return in the future – once the Corona crisis has ended. The company’s ability to continue as a going concern could thus be confirmed.
Consulting and Interim Management achieve excellent results in the hospitality industry
The renewed lockdown, which has been ongoing since November, hit the hospitality industry and thus also our client, despite the prospect of state aid. The prepared business plan was again outdated, a final expert opinion could not be presented to the accompanying house bank. What does this mean for our hotel?
Together, the management, the interim manager and the consultants proactively initiated discussions with the house bank. The expert opinion was discussed in draft form and financing solutions were worked out. In principle, all parties involved still assume that the outlined planning will be achieved in the future. However, the starting line of the planning is shifting backwards, and a reliable forecast can hardly be made under the current conditions.
Thanks to the support of the consultants and the interim manager, the company is now prepared for the coming months; targeted sales activities are ready in the drawer and can be started at the push of a button. The house bank has extended the credit lines and has confidence in the concept.
Conclusion
Although it has not yet been possible to close the concept due to the rapidly changing environmental conditions, the confidence of the financing house bank in the hotel operation has been increased significantly. A new holistic co-ordinated strategy concept was compiled, waits for the conversion and offers genuine chances to act in the future economically successful on the market!
