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Case study: The Suites at 1 King West – From Receivership to Success

Background:

In August 2007, a 575-room, luxury, condominium-hotel at the corner of King and Yonge Streets in downtown Toronto was put into receivership. CK Atlantis was appointed interim manager of the hotel by the Receiver. The CK Atlantis mandate was to stabilize operations and increase profitability so as to maximize sales proceeds on the eventual sale of the assets. As an unbranded hotel in disarray, The Suites at 1 King West lagged the downtown Toronto market in all aspects of performance.

Actions:

CK immediately focused on streamlining the organization. It identified the stronger team members and it went about rightsizing the organization. It recruited strong leadership in areas where it was needed.

The next level of focus was to increase revenue so as to make the business self-sustaining during the receivership and thereafter. Specific targets for markets and customers were set and the sales and marketing resources were properly deployed against these targets. The market was informed that the hotel was open for business and effort was put into creating perceived stability. After approximately seventeen months of operation during which time the businesses were completely self-funding, the Receiver sold the assets to the building’s condominium corporation on the 1st December, 2008.

The condominium corporation immediately entered into a long-term contract with CK Atlantis to manage the businesses which were acquired. CK worked with the condominium board to set long term plans for the businesses and to design an appropriate governance model for the businesses and the legal entities which were set up to oversee them. CK hired a local marketing firm to rebrand the hotel. The property was relaunched as One King West Hotel & Residence and a new logo, website, advertising campaign, etc. was created. CK also developed a capital plan to take the businesses to the next level of success. With the use of search engine optimization strategies, online reservations quickly increased over 100% from the receivership period. Overhead costs were further reduced in the support and back-of-house services while spend on marketing and property maintenance was increased so as to properly market and deliver an appropriate level of service for this upscale property.

Results:

The revenue per available room (RevPAR) gap between One King West Hotel & Residence and their competitive set of downtown hotels was reversed from lagging by $13.82 in 2007 to a lead of $7.17 for 2010 for a revenue difference of $20.99 per room.

At the same time the hotel reduced the cost per occupied room by 11% resulting in increased room department profitability from 71.54% to 74.29% while reducing A&G cost by 47%.

The impact of these changes, the overall stability of the operations, the capital improvements which were made and the significantly higher profit distribution to rental program owners is now translating to increased property value of the units. The hotel is now preparing to undertake an extensive room renovation project without a cash call to owners and the hotel is being steered towards increased profitability in the future.