Four years on from the peak of the pandemic, we talk to Shreyansh Shah – a Specialist Business Broker with Xcllusive Business Sales.
One of the hardest hit industries during the COVID pandemic would have to be the hospitality industry. Four years on, what’s happening in this sector?
“The journey for hotels, restaurants, and other businesses in the hospitality sector has been arduous,” said Shreyansh.
“Initially, when the pandemic hit its peak, many establishments were forced to shut down completely or operate under stringent regulations to curb the spread of the virus. With people hesitant to venture out due to fear of infection, businesses faced significant losses.
“However, as time passed, there was a glimmer of hope. Businesses began adapting to the new circumstances by embracing technology more fervently, incorporating tools like QR codes for contactless menus and payments, and implementing stringent cleanliness and safety measures to reassure patrons.
“Gradually, some segments of the hospitality industry began to show signs of recovery. People started to venture out more, craving social interactions and dining experiences. Despite these positive developments, challenges persisted. Many establishments struggled to recruit an adequate workforce, while others grappled with a decrease in foot traffic, particularly in CBD where remote work remained prevalent.
“Nonetheless, there is a sense of cautious optimism within the industry. While the road to full recovery may still be long and challenging, the hospitality sector is resilient and slowly but surely regaining its footing, eagerly anticipating brighter days ahead.”
So, is it a good time to sell a hospitality business?
“There are several factors that may contribute to why it could be a good time to sell a hospitality business:
Market Recovery: After the challenges posed by the pandemic, the hospitality industry is gradually recovering. Consumer confidence in travel and dining out is returning. This recovery could mean that the value of hospitality businesses is on the rise again, making it a favourable time to sell.
Pent-up Demand: Many people have been eager to travel, dine out, and experience leisure activities after being confined for so long. This pent-up demand can translate into increased revenue for hospitality businesses, making them more attractive to potential buyers.
Accessibility to Enter the Market: In many areas, the costs associated with purchasing retail hospitality businesses remain modest, resulting in potentially lower borrowing expenses for prospective buyers. This circumstance can facilitate the financing of hospitality business acquisitions, broadening the scope of potential buyers and potentially leading to a favourable return on investment (ROI).
Shift in Consumer Preferences: The pandemic has brought about changes in consumer behaviour and preferences. For example, there has been a growing interest in outdoor dining, contactless payment options, and wellness-focused travel experiences. If a hospitality business has adapted well to these shifts, it may be perceived as more valuable to potential buyers.
Retirement or Lifestyle Changes: Owners of hospitality businesses may be considering selling due to personal reasons such as retirement, relocation, or a desire for a career change. In such cases, selling during a period of market recovery and increased demand could result in a more favourable sale price.
Optimal Timing: Timing is crucial when selling a business. It’s essential to consider factors such as the current market conditions, the financial performance of the business, and potential future trends. Selling at a time when the business is performing well and there is strong demand from buyers can maximize the sale price and ensure a smooth transition for both the seller and the buyer.”
Several hospitality businesses have successfully sold through Coast to Coast recently. How does this work?
“Coast to Coast operates as a sister brand of Xclusive Business Sales, leveraging an extensive database of genuine buyers actively seeking to transition into new lifestyle ventures. With a primary focus on the hospitality sector, Coast to Coast offers various strategies for facilitating business sales. In the current challenging market landscape, particularly prevalent in the hospitality industry, Coast to Coast collaborates closely with business owners to optimize their sales outcomes.
“Recognizing that owners possess unparalleled insight into their businesses, Coast to Coast believes in empowering them to spearhead the sales process. The role of the broker is to provide expertise in positioning the business effectively and attracting potential buyers, while leveraging the owner’s intimate knowledge of the business.
“At Coast to Coast, selling your business is accessible, with packages starting from just $2,000. This approach ensures that business owners can achieve their desired outcomes whilst enjoying the freedom they seek from their businesses.”
What is the secret to successfully marketing a hospitality business?
“Successfully marketing a hospitality business requires a multifaceted approach that considers various factors unique to the industry. Key strategies that contribute to effective marketing include:
Target Audience Understanding: Understanding the target audience is crucial. Whether it’s tourists, business travellers, families, or local residents, knowing who your customers are enables you to tailor your marketing efforts to their preferences and needs.
Online Presence: In today’s digital age, having a robust online presence is imperative. This includes a professional website optimized for search engines (SEO), active presence on social media platforms, and listings on travel and hospitality websites. Engaging content such as blog posts, videos, and user-generated reviews can also enhance your online visibility and credibility.
Visual Appeal: High-quality visuals play a crucial role in attracting customers. Professional photography showcasing your property’s amenities, accommodation, and dining options can make a significant impact on potential guests’ perception and decision-making process.
Strategic Partnerships: Collaborating with local businesses, tourism boards, and travel agencies can help expand your reach and attract new customers. Offering special packages or promotions in partnership with complementary businesses can also create mutually beneficial opportunities for cross-promotion.
Exceptional Customer Service: Providing exceptional customer service is paramount in the hospitality industry. Positive word-of-mouth and online reviews from satisfied guests can significantly influence others’ decisions to patronize your business.
Personalized Marketing: Utilize customer data and insights to personalize marketing efforts. Tailoring promotions, offers, and communications based on guest preferences, past behaviours, and demographics can enhance customer engagement and loyalty.
Community Engagement: Engaging with the local community through events, sponsorships, and charitable initiatives not only fosters goodwill but also helps build brand awareness and loyalty amongst local residents.
Continuous Evaluation and Adaptation: Regularly evaluate the performance of your marketing efforts through metrics such as website traffic, conversion rates, and customer feedback. Use this data to identify areas for improvement and adapt your strategies accordingly.
Consistency and Persistence: Building brand awareness and attracting customers takes time and consistency. Stay committed to your marketing efforts and be patient as you work towards achieving your goals.”
How do you help owners sell their business?
“Helping owners sell their business involves a comprehensive process aimed at maximizing the value of the business and facilitating a successful transaction.
Initial Consultation: The process usually begins with an initial consultation with the business owner to discuss their goals, objectives, and reasons for selling. This helps establish a clear understanding of the owner’s expectations and sets the foundation for the sales process.
Business Valuation/appraisal: The next step involves conducting a thorough valuation/appraisal of the business to determine its market worth. This includes assessing tangible assets, financial performance, market trends, and comparable sales in the industry. The valuation helps establish a realistic asking price and provides valuable insights for potential buyers.
Preparation and Documentation: Once the business is valued, we advise the owner in preparing all necessary documentation for the sale. This may include financial statements, tax returns, leases, contracts, and other relevant records. Proper documentation is crucial for building buyer confidence and expediting the due diligence process.
Marketing Strategy: A tailored marketing strategy is developed to showcase the business’s strengths and attract qualified buyers. This may include listing the business on relevant online platforms, reaching out to potential buyers through targeted marketing campaigns, and leveraging the advisor’s network of contacts and industry connections.
Screening and Qualifying Buyers: Potential buyers are screened and qualified to ensure they have the financial capability and genuine interest in purchasing the business. Confidentiality agreements may be signed to protect sensitive information during the negotiation process.
Negotiation and Deal Structuring: We play a crucial role in negotiating terms and structuring the deal to achieve the best possible outcome for the vendor. This involves navigating complex issues such as price negotiation, payment terms, non-compete agreements, and other contingencies.
Due Diligence Support: During the due diligence phase, we assist both parties in gathering and reviewing all relevant information to ensure transparency and mitigate risks. This includes coordinating with legal, financial, and other professionals to address any concerns or discrepancies that may arise.
Closing and Transition: Once all terms are agreed upon and contingencies are met, the sale is finalized through a formal closing process. We facilitate the transfer of ownership, ensuring a smooth transition for both the seller and the buyer. Post-closing support may also be provided to address any remaining issues or concerns.”
To find out more about Coast to Coast marketing packages – including our Premium Media Package and VIP Broker Package, phone 1300 793 792.