*written by Assured Hotels
Assured Hotels (AH) assumed responsibility for day-to-day management of a 37-unit aparthotel in early 2019, near the south coast of England. The business was in administration, so this was on behalf of a UK Bank and Insolvency Practitioner as the stakeholders, who wanted to trade up and exit the property via sale as a going concern.
Our scope and role changed in March 2020 and the onset of the pandemic when we were initially tasked to manage the business at breakeven from essential workers. However permanent closure later in 2020 to facilitate vacant possession on exit required a different solution.
Stakeholders were keen to protect their exposure by ensuring the security of the property, however even basic lone worker security cover would have added circa £9,500 pcm and most risk assessments do not allow lone guards so that could double the cost. Added to other holding costs like insurance & utilities, running into many more thousands each month just to standstill.
Unmanageable costs in the shadow of falling property values is the harsh reality of the wider crises. A strategy to reduce costs whilst buying time to run a thorough marketing assessment & process seemed a big ask but we have developed a solution towards a delayed exit.
AH introduced a property management company Ad Hoc, who as well as having a reputation for conventional security solutions provide live-in property Guardians, so were able to present to the stakeholders a costed feasibility with the following immediate benefits:
- 24-hour security – built in with Guardians in occupation, deterring any property vandalism or latent defects normally associated with vacant premises.
- Cost mitigation – Ad Hoc make an immediate and significant contribution to reduce stakeholder holding costs.
- Short term commitment – 12 weeks minimum term, allowing time to assess market options without onerous or long-term commitment.
- No tenancy rights – licensee agreement is fit for purpose allowing only 31-day notice to re-occupy.
Ad Hoc have provided this solution across a range of building types in the UK since 2006, more details can be read on their website . The agreement between the Stakeholders and Ad Hoc covered all possible scenarios, legal responsibilities and crucially allows the incumbent owners full access during the contract term.
Guardians were in residence within 3 weeks of contract signing, and from that commencement date the property was secured and fully occupied whilst saving the owners almost £14k per month on holding costs from just 25 Guardians living in. For this particular property that meant a breakeven position, to then allow time to explore the options and opportunities to maximise the asset value.
A further benefit from this process leaves AH in the backround, and well placed to support the current owner and potential purchaser if the asset is returned to hotel use, with all trading data and business critical systems retained.
For further options linked to asset preservation options we have worked on in the past 12 months please see our website or get in touch to discuss support in any area of hotel & hospitality recovery planning:
e. firstname.lastname@example.org t. 0203 205 7239
or book a no-obligation meeting @ https://meetings.hubspot.com/mgriffin6