Hotel consultants, hotel development, hotel strategy, hotel marketing - Case study 2

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Case study 2 - Financial management services

The client: the board of directors of a Luxembourg joint venture entity in which a US-based private equity fund holds 90% of the equity and a UK private company holds 10%.

Background: a portfolio of seven hotels in the UK was acquired in 2006 from Hilton Group plc and managed under management contract to the joint venture. The hotels were sold with the benefit of a short-term licence agreement with Livingwell Health Clubs and Hilton but, after a few months, were rebranded to Holiday Inn (5) and traded unbranded (2) with the six health clubs rebranded.

Consultant: Ian Graham

Project date: March 2005 - March 2006

Project objective: to provide financial management services to the new business, enabling the businesses to be acquired, traded and rebranded, whilst also ensuring that all debt service and other corporate governance issues were addressed.

Project scope

The Hotel Solutions Partnership consultant worked with the management company and the joint venture equity partners to ensure that the business was equipped with all the necessary financial and other management tools and resources required enabling the several phases of transition.

Methodology

The internal teams at Hilton, at the management company and at the hotels were coached to ensure all aspects of process, technology and organisation were appraised, enhanced or added to throughout an initial six-month assignment, which was extended by a further two 3-month terms.

Results

Early adoption of international accounting standards
On-time settlement of working capital balances with Hilton Group plc
On-time reporting to UK and Luxembourg fiscal authorities
On-time reporting to the US private equity fund
Compliance with debt service obligations
Compliance with VAT reporting
Compliance with requirements of the joint venture agreement
No material audit concerns from PricewaterhouseCoopers
Phased transfer of roles to newly-hired staff members in the UK and Luxembourg

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