From selling entire resorts to offloading underperforming facilities, Paul Smith explains how hotel and leisure operators can better utilise land to boost revenue.
It's no secret that the Covid-19 pandemic has had a huge impact on the hospitality and leisure industry. While government support shored up the sector, for some it won't be enough to save their business.
Figures from land promoter the Strategic Land Group (SLG) illustrate the damage wrought on the industry: the company has seen a 200% increase in enquiries from hotel operators looking to sell underused land and facilities in order to boost cashflow.
Some intend on selling entire resorts, while others are interested in selling underperforming facilities, such as spas and golf courses, as well as excess parcels of land. Doing so will allow them to bolster balance sheets, cut back on loss-making services and create separate long-term income streams.
The first step is to take an objective look at the land and facilities you have and which parts of the grounds or resort are being used to their fullest.
Think about where you would like the business to go in the future and consider whether, for example, a golf course remains an intrinsic part of the hotel offer. Make sure you're clear on what you have and what you need – and what could perhaps be better utilised in the long-term.
Make sure you're clear on what you have and what you need – and what could perhaps be better utilised in the long-term
Selling underused land
Hotels are often very well-positioned, close to towns and villages, and with utility supplies in place. This land is likely to be a good location for new homes.
If a plot of land is sold for residential development, as opposed to other uses such as grazing or agriculture, its value will increase, providing the hotel with the funds to invest into the business, develop new services or to carry out refurbishment works.
Operators should contact a land promoter like SLG who will be able to assess the land and its potential for development.
Don't sell land for less than it's worth
Often when a spa or golf course is underperforming, it will be closed or sold to another operator. Make sure you're clear on whether you'd derive the most value from a sale in its current guise or to sell the land for a different purpose. The difference can often be surprising – don't sell your land for less than it's worth.
Consider new ventures
If your land isn't suitable for development – for example if it poses access issues – it can still generate income. Consider new ventures which may be more suitable. Post-pandemic, there will be increased demand for outdoor activities, so contact operators and start having conversations. Outdoor events will also be popular, such as concerts and plays, and new ventures may not only allow you to generate income from poorly utilised space, but could also bring in additional guests.
Don't let underused land go to waste – make it work hard for your business.
Paul Smith is managing director at Strategic Land Group
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