For a bid of refinancing multiple overseas hotels, an asset management company retained by a bank contacted Hospitality Directions. Our mission was to visit the hotels to support their due diligence and to review operational forecasts submitted by hotel management companies. We focused on whether the bank can collect the debt by refinancing, and also pay our client’s asset management fee from the collection.
Hospitality Directions provided the following services:
■Site visits and market information
Hospitality Directions has strong operational experience in the world’s leading tourist area—where the hotels in question are located. We utilized our local network and provided the latest market information. In addition to market analysis, we actually visited the hotels to observe operations.
■Review of the hotel’s forecast and formulation of five-year cash flow
We analyzed the operational forecast submitted by the hotel management company. Based on site visits and market trends, we reviewed the forecast’s accuracy. We then calculated five-year cash flow after refinancing to understand whether the bank can collect enough debt to pay the asset management fee to our client.
A Comment from Hospitality Directions
When financing, we tend to focus on financial statements. Hospitality Directions has extensive operational experience to judge if these statements are realistic. We also endeavor to raise issues which didn’t appear on documents but that might affect hotel operations.
