Download - BDO John O'Callaghan
Business Planning for the Hospitality SectorFebruary 2012
Our Clients- Hospitality & Food Sectors
Page 2
Setting the scene
• Tourism business survey conducted on behalf of
Fáilte Ireland, towards end of 2011
• Over 1,200 businesses surveyed- achieved 22%
response rate
- Measured Performance during 2011
- Expectations for 2012
- Issues and Challenges facing the tourism sector
Page 3
Overall Performance During 2011
Page 4
My business generated an operating profit in 2011
Overall Performance during 2011
My business broke even
My business incurred an operating loss in 2011
3 in 4 tourism businesses achieved at least break
even performance during 2011
3 in 4 tourism businesses achieved at least break
even performance during 2011
One quarter of tourism businesses incurred an operating loss in 2011
One quarter of tourism businesses incurred an operating loss in 2011
%
Sector Observations
Page 5
Total
After accommodation providers, F&B businesses are the most positive in relation to overall performance
in 2011.
Accommodation provider
ActivityFood &
beverageVisitor
attraction
My business generated an
operating profit in 2011
My business broke even in
2011
I expect My business incurred
an operating loss in 2011
Overall performance in
2011% % % %
2012- Tourism Sector Outlook
Page 6
Energy costs
Total revenue/turnover
Rent/property cost
Net profit margin
Commercial rates
Payroll
No. of employees
Level of change anticipated over the next
12 monthsSignifican
t decrease)
Significant increase
• 48% of businesses expect turnover to increase in 2012
• 41% expect NP to also increase during 2012
• 62% of businesses expect energy costs to increase in 2012
• 27% expect payroll costs to increase during 2012
Increases in payroll and employee numbers not necessarily a negative if they are being driven by
increases in the volume of business
What are the Key Factors Impacting on Tourism Businesses?
Page 7
Impact on business
Rising costs
Lack of consumer confidence
Cash flow pressure
Domestic demand
Increased competition
Difficulty in accessing credit
Overseas demand
Currency fluctuations
Other
None
Rising costs, lack of consumer confidence (ESRI largest drop in 10 years) and cash flow are the key issues exercising
tourism businesses.
BiggestImpact
Any Impact%
What are the Key Factors Impacting on Tourism & Hospitality Businesses- Difficulties servicing debt
Page 8
Performing % Watchlist/ Past Due % Default/ Impaired %
Agriculture & Food 81.38 13.83 4.79
Public, Community & Local 71.99 19.99 8.01
Total 70.48 18.02 11.5
Wholesale & Retail 69.31 17.1 13.6
Professional & Real Estate 68.92 20.1 10.98
Transport & Comms 66.26 20.1 13.63
Manufacturing 65.9 20.38 13.72
Financial 65.79 16.22 17.99
Construction 65.23 12.75 22.02
Energy & Mining 53.31 20.78 25.91
Electric 49.63 48.08 2.29
Hotels & Restaurants 48.9 34.82 16.28
Central Bank Survey- Hotels and Restaurants, one of the key groups of the SME sector that are struggling to keep up to
date with loan repayments
Know your business
Know your
market
Have the right
people
Use external supports
Have the right
information
Document & execute your
plan
Watch your
timeline
CREDIBLE BUSINESS PLAN
Page 9
Know your market…
Page 10
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
Important Questions
• Where is my market now?
• Growing /retracting / stagnant
• How will it evolve over the next 3-
5 years?
• Customers/ products
• What are the growth
opportunities?
• New Markets/ New products or services/ Partnering?
Information Sources
Fáilte Ireland, Tourism Ireland & CSO statistics and data
Trade and Representative Bodies- IHF, LVA, VFI, RAI
Sector publications
Internet research
Trends
Restaurants- local sourcing of ingredients, healthy nutritional food, smaller portioned meals, social media (influencing where people eat), iPads for menus and wine lists
Hotels- Vending machines to replace room service, free WiFi, electronic check-in, wet-rooms as opposed to bathrooms
…then look objectively at your business…
Page 11
• Complete a SWOT
• Exploit strengths and
opportunities?
Issues to be considered
• What are your customers saying about the business and its services?
• Customer comment cards
• More importantly what sort of opinions are prospective customers forming about your business
• Third Party web-sites (Tripadvisor)
• Independent Reviews
• How does your business compare to that of a competitors?
• Mystery Shopper
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
…have the right people…
Important Questions
• Do I have the right people to drive
the business?
• Are there any skills gaps?- How
can these be addressed- Fáilte
Ireland/ SOLAS
• How do I retain and motivate the
right people?
• Any future succession issues?
Practical Tips
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
DRAGONS DEN
Appraisal
Incentive packages – performance bonuses
Assessment
Make changes
Page 7
…have the right information…
Page 8
Important Questions
• Have I….
• Relevant and timely
information?
• Regular mgt accounts,
budgets, cashflows?
• Adequate and reliable
information systems?
Practical Tips
Identify and prepare KPIs
Rolling 3 month cash flows
Get into discipline of doing a budget
Consider and take action on variances
• Forecast peaks & troughs in cash
• Take corrective action NOW!
• Communicate with stakeholders/ lenders
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
…use external supports…
Page 14
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
Practical Tip
Use network events and industry associations
…use external supports-
Page 15
…use external supports…
Page 16
FUNDING SOURCES
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
Government Finance
SEED CAPITAL FUNDS
Equity Finance
VENTURE CAPITAL
BUSINESS ANGELS
EMPLOYEE INVESTME
NT INCENTIVE SCHEME
BANK DEBT
Debt & Working Capital
WORKING CAPITAL
MANAGEMENT
….document & execute your plan…
Page 17
=Business
Success
DOCUMENT
+IMPLEMENT
+REVIEW
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
….document & execute your plan…
Page 18
Know yourMarket
Know your business
Watch your
timeline
Document & execute your plan
Useexternal supports Have the
right informatio
n
Have the right
people
Enjoy It!
OUR TEAM
Kevin Doyle, Tax Partner
470 0301
John O’Callaghan, Audit Partner
470 0121
Presentation to NAMAPage 19
Derry Gray, Managing Partner
470 0350
Austin Hickey, Senior Mgr.
470 0352