Fully describe the business's activities?
Established four star Hotel, Spa and Conference Center situated in Cape Town suburbs and predominantly focused on the corporate market with long term relationships and a solid return customer base. Market segments currently at 75% Corporate and 25% leisure. Superb state of the art conference facilities spread across six venues which combine and double up as function venues over weekends. The Food and Beverage outlet commands a staggering 120% of total rooms revenue confirming popularity amongst local patrons. The current seating capacity of the Restaurant is 220 pax (inside and outside). This, coupled with a "country setting" feel, large tree shade, 180 on site parking bays, pool area, designated "kiddies" area, on site Spa and easy access from all major routes, including a stone's throw drive to enter the wine routes, make this opportunity a true hotel service and country feel experience. An opportunity not to be missed. Ample Housekeeping / Conference Venue and F&B storage facilities with on site POS system that integrates to IDS - GDS - Reservations and daily audit and management accounting protocol in line with USAL method of hotel accounting practice across all departments from 21 work stations.
How long has the business been established?
The Hotel was established in 2005 from the conversion of a large property into a full service hotel, spa and conference venue offering.
How long has the owner had the business?
In 2007 the current owners embarked on a 10 year strategy whereby the hotel has undergone a constant evolution of extension to rooms and facilties. This remains a current trend to this day with an additional 8 rooms being added in the first quarter 2018 at a low CAPEX outlay.
How does the business operate on a daily basis?
The Hotel operates as a TGCSA approved four star Hotel, Spa and Conference Venue.
How are the clients attracted to the business?
Marketing is extensive and is carried out on a daily, weekly, monthly and yearly basis dependent on the distribution channel being targeted. This is coupled with On Line presence interactive platforms like GDS and IDS systems linked to the on site point of sale system. In addition, a specialist company is engaged to ensure the Hotel and its offerings are kept current and in line with market trends locally, regionally and nationally via online campaigns and social media networks, all derived from the 10 yr client databases and exterior relationships with corporate and leisure markets. There is a dedicated sales person who maintains these relationships and travels extensively to find new market opportunities.
Does the business have any contract work?
There is a corporate and leisure client database that supplies a continuous return business segment that uses not only the conference facilities but also the rooms and food and beverage facilities all year round. The contracts are made available at guaranteed best rates against volume of usage over a period of time and/or against supply and demand peak periods. The hotel has secured a large share of the market from the direct business hub located within the surrounds and therefore secures annual contracts on a continuous basis.
What competition exists?
Competitive analysis of rates and services are carried out every 2nd month to ensure Market Penetration is optimal. This hotel is the largest provider of accommodation in the immediate area and also has healthy relationships on a referral basis with 4 other same or lower graded accommodation facilities within the immediate surrounds. These facilities are running healthy occupancies but do not have the superb location this Hotel offers.
What are the seasonal trends?
Cape Town has its traditional variable seasons of Winter, Autumn, Spring and Summer but this hotel does not experience the severe highs and lows associated with such seasonality due to the large portion of corporate clientele mix. In addition, travel that combines business and leisure - "bleisure" - is becoming increasingly popular. Fans of these types of trips report that it helps them to work more effectively, takes some of the stress out of business travel and keeps them more relaxed while away from home. Hotels that offer the best of both business and leisure facilities have the competitive edge when it comes to attracting these tourists and this hotel has established itself in this niche market due to its serene location and facilities.
Is the business VAT Registered?
What VAT documentation is on file?
All VAT records are on file and will be made available to qualified buyers.
Are there up-to-date Management Accounts available?
Audited AFS are available to qualified buyers.
What Balance Sheet and Income Statements are available?
All dating back to inception if required.
What is the age analysis of the debtors book?
As is standard in all hotel operations, certain Leisure and Corporate clients will be afforded 30 to 60 days. However, this component - as with the creditors - would form part of the adjustment account in the sale agreement allowing for the pro rata balance to be equalized to the creditor party.
How could the profitability of the business be improved?
The F&B operation is under performing by as much as 15% - 18% but HR measures are already in place to remedy this. However, this is a constant that requires a higher level of expertise. This alone can equate straight back to the NOP. Additionally there is a 40% margin of growth to the Conference Rates and accommodation rates that can be tiered into place by upscaling of rates to NEW client base without deferring or jeopardizing existing clientele base. The property also currently enjoys only 40% of its bulk capacity so by going up in height to 3 storeys, the hotel could be expanded by as much as a further 80 rooms changing the entire landscape and business potential of that which currently exists.
Is Seller finance available and for what amount?
There is NO seller finance available at this juncture.
Key Performence Indicators
Room Occupancy 63% Average Daily rate R838.00 RevPAr R528.00 Sales Mix FIT 10% / Corp 50% / STO 15% / Group & Conv 15% / Other 10%
What is the total staff complement?
Between 65 - 72 dependent on seasonality requirements when "casual staff" is employed on a temporary contract basis.
Give a breakdown of staff/ functions/ length of service?
A complete staff breakdown of all positions / functions and CTC expense would be provided to qualified buyers.
Do any receive special perks or incentives?
Year End Industry Specific Bargaining Council bonuses or owners discretion. Telephone allowance for Sales / reservations if and when required on a refund to cost basis.
Are they on contract?
Yes on contract either Permanent / Fixed Term or Casual a complete list would be made available on request.
Do any have management potential?
Current Management Structure consists of 11 Key personnel who are skilled and who perform selected daily, weekly and monthly management functions. Duty Manager Duty Manager Duty Manager Key Accounts Manager HOD Accounts Restaurant Manager Restaurant Manager Head Chef Events Manager Housekeeping Manager Reservations Manager Group Reservations Manager
How involved is the Owner in running the business?
The owner currently runs the daily operations in conjunction with HOD's and Hotel Management
When does the current lease end?
Is there an option of renewal & what period?
Internal Lease is at discretion of purchaser to continue on new terms deemed fit for purpose and/or could be leased to a third party operator if a buyer is only looking to secure the property.
What is the annual escalation %?
What are the trading hours?
24/7 - 365 days per annum
What is the square meters of the business?
Three separate ERF's :- 1. 6000 m2 - zoned for business and Hotel rights GFA only at 50% 2. 5500 m2 - zoned general business and conference facility GFA only at 23,37% 3. 4800 m2 -- area being converted from residential dwelling into a further 8 hotel rooms currently - with low CAPEX input as foundations and civil services are already in place.
Is a copy of the lease available?
There is a current internal Lease between OPCO and MANCO which entities are purchased in sale agreement. The need to continue an internal rental will be at the purchasers' discretion.
Do you require a licence?
Business and Liquor Licenses form part of the sale.
What lease deposit and/or other surety is required?
Type of Hotel
TGCSA graded 4 star Hotel, Spa and Conference Centre - 75% Corporate / 25% Leisure Markets
What are the main assets of the business?
The immovable property, the FF&E and goodwill.
Are any items not included in the sale?
A complete Asset register will be made available to qualified buyers.
What is their overall condition?
All FF&E / OS&E equipment is in excellent and fit for purpose condition throughout Rooms / F&B / Conference and General Service areas.
Do any require repairing?
How have they been valued ?
Assets have been valued in conjunction with annual insurance revisions and requirements inclusive of fixed immovable assets / FF&E and OS&E equipment.
Which assets are on lease/HP and with whom?
Vehicle assets included / excluded are TBC
What are their settlement amounts?
Will Seller settle or Buyer to take over?
To be settled by seller and/or select vehicles to be confirmed as part of operational going concern movable assets that will be part and parcel of sale agreement.
Are copies of agreements available?
Are they presently insured?
The Hotel has a well established brand with excellent relationships with both key corporate and leisure markets. It has firm traction and healthy return clientele base. There is a fantastic mix of boutique offerings, on site spa, function and conference facilities with ample on site parking, designated kiddies play and venue area, two pools, outside braai area, casual bar - Bistro offering. This is a genuine Hotel opportunity, that has gradually grown its MPI share by developing its market offering on a supply and demand basis.
F&B control can only be improved and at the moment trades at a higher than normal F&B cost %. The Hotel F&B Dept runs at 47% which is substantially higher than the accepted norm of 35%. This can however be remedied and will improve NOP by 12%. Mid level skill set in management can be improved.
In terms of land use a considerable amount of rooms could be added along with support service areas. The area itself is experiencing the largest corporate and domestic growth rate in the Western Cape with more and more businesses opting for this area for their corporate offices. The guest ranking is 4.7 out of 5. There is also a university being developed in close vicinity which will bring added direct business from visiting families and educators on NEW Rates. Profitability will be substantially improved by increasing the number of rooms, controlling the food cost and increasing the room rates gradually.
A major influx of new rooms can saturate the rate yield for a year or two but again the market mix at this establishment, coupled with its direct access to major corporate markets and local customers, create a hedge against seasonality swings.
What is the reason for the sale?
The one partner in the business has recently passed away and the remaining party would like to move on.
Why is this a good business?
Hotels for sale are rare to find in Cape Town, specifically ones that are already established and have consistent growth in occupancy and rate yield. This is a fantastic opportunity for a smaller hotel operating brand or for someone wishing to find traction with a hotel offering in one of the most sought after locations in Africa.
What is the price plus stock and the net profit?
The Hotel is offered to the market at R71 million.
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