UK Hospitality

Date:

2016-2017 (4 months)

Company:

A wholly owned subsidiary of the Diocese of Carlisle, part of the Church of England and the Anglican Communion.

Assignment:

To restructure the business so that it can operate profitably and deliver its purpose: ‘Mission Through Service, Profitably’. To achieve: a proactive approach to business development; an ability to see and measure the direction of travel; a decentralised decision making approach, whilst working effectively in teams; a system that gives the business a revised path to improved cost performance.

Role:

Interim General Manager

Assignment Length:

4 months

Background:

In 1970, the Diocese of Carlisle bought Rydal Hall and the surrounding land (about 34 acres) from Rydal Estates. The facility was established to act as a Christian retreat and conference centre.

Like much of the Church of England, cash is tight and the hall has always been expected to generate enough funds to be able to sustain the work it needs to undertake to fulfil its obligations to its major stakeholders including guests, church and employees.

As part of the modus operandi Rydal Hall has a resident international community. Over the years, this evolved so that about half of the number comes from within the European Economic Area and half from the rest of the world. In recent times, the UK immigration Service has changed its stance on the way it interprets Visa rules, which led to problems with the status for non-EEA community members.

In c.2007/8, a significant grant (c.£0.75M) was obtained to upgrade the hall, a grade II listed building, which enabled a much-enhanced standard of service and accommodation to be offered.

Over the years, the hall has established a reputation within its traditional client base for being an excellent place to experience a homely, welcoming, tranquil and peaceful environment (The Rydal Experience), where quality of thought can grow and develop in whatever subject area the guest is concentrating on. This has resulted in an enormously high return rate, or repeat purchase coupled with tremendous loyalty to the place (situated in the heart of the Lake District).

The whole estate has operated to high conservation standards over the years. This includes managed woodland, an area where red squirrels are encouraged and protected and the use of a hydro-electric power generation plant set up within the grounds, using the beck that passes through. A facility has operated for 100 years (the centenary being 2017) with the current plant generating up to 0.5MW electricity.

At the start of 2016, Storm ‘Desmond’ had caused a great deal of damage in the area. Insurance claims had not been pursued with any vigour, nor had the repair of the shared public access road to the property.

The previous General Manager had moved to another centre during the summer, leaving the business without a replacement for a few months. The board became concerned that the performance of the company was suffering from short term issues and longer term structural problems, and with little balance sheet resilience, decided to engage an interim to resolve matters.

The Brief:

Service levels needed to be maintained, whilst resolving a rapidly deteriorating financial position coupled with low staff morale. The management team was suffering from poor health for extended periods and a lack any proactive financial, people or business development direction.

The board requested that the new interim GM assess the underlying problems and do what was necessary to restore the balance between spiritual purpose and business stability. This included providing guidance for the future direction of the company beyond the time of the assignment.

The Operating Situation:

As the assignment started, the diocese had made the decision to re-patriate the visa holding community members to avoid any difficulty that might arise as a result of the UK Immigration Service having reviewed its position vis a vis the way the business was operating the relationship. The net effect was the loss of 50% of the direct workforce at a time when the business was operating with high occupancies. The decision was implemented rapidly, which left the business needing to recruit a fresh team, which was achieved from start to finish in 4-5 weeks. No measurable impact on guest service and satisfaction was found but this was achieved with very high short term workloads on remaining staff and a number of volunteers who brought real impetus and support.

Meanwhile, the business review was conducted. Major findings were:

• There had been no price rises in any area of the business for 2 years
• Year-end Losses would be at least 5% on sales (actual 14% due to a high seasonality)
• Renewed effort was required to introduce an electronic booking system
• No analysis of market niches served or potentially could be served
• All marketing was, at best, passive, with no focus on business development
• Financial information was generated for the sole benefit of the shareholder (the diocese)
• The business was short of various forms of professional expertise
• Leadership and team work was fragmented and limited
• Skills within the business were not actively used
• The organisation was doing what it had always done and was not seeking to improve
• Information flow within the business was strictly limited to a ‘need to know’ basis

The starting point was to re-structure the senior management team and initiate regular team and whole staff briefings.

The diocesan HR Manager was co-opted onto the team and provided direct expertise to establish the basics of good rapid recruitment, relevant job descriptions and a working company handbook in the first instance. The task was then to develop a functional local HR base that could sustain the business need.

A business development function was established with an internal promotion who led the electronic booking system project and commissioning, website upgrade and training of staff to support the activity.

The Operations Manager decided to leave the business and the direct reports were then given clear supervisory roles, reporting directly to the GM.

The bursar gave notice of retirement from the business after 12 years of service. The replacement Finance Manager was recruited to work full time and provide a full functional service to the organisation.

Before the arrival of the new finance manager, several actions were undertaken:

• Monthly P&L management accounts produced by end week 2 instead of month end or beyond
• A top-down budgeting process was established for the first time, as year 1 of turnaround
• Capital expenditure was separated from revenue spend and depreciation rules established
• A financial business model was built to enable scenario planning and forecasting
• A cost centre approach to monitor monthly operating spend was identified
• The company was split into several lines of business to give focus. These included the hall itself, tea shop. youth centre, camping (range of forms), bar, etc.

Early in the assignment, the diocese was encouraged to initiate the recruitment for the permanent replacement GM. By the end of the assignment the appointment had been made and the notice period was being worked through.

A complete review of pricing by line of business was undertaken. These were set for the coming year, with principles established for use beyond that time. Additionally, the concept of low and high season pricing was introduced, along with additional service offerings; the ability to analyse bar sales by line, tea shop sales by line and a preliminary view of setting up a loyalty scheme. A corporate relationship was set up with a hotel where access to fitness centre and spa was negotiated for use by hall guests.

Stock holding and lines sold in both the tea shop and bar were reviewed and refreshed. A review process was put in place for future use based on popularity, availability and margin.

The electronic booking system was in place and operational by assignment end. The on-line booking module was anticipated for installation at the end of Q1’17.

In preparation for active marketing of the company, a number of target niches were identified, based on existing business analysis. As well as church and related activity, academia, writers, arts and crafts organisations, schools and walking groups will be pursued.

The website was upgraded.

Business development support was put in place, coupled with ‘front of house’ operations.

Regular updates were provided to the Diocesan Board of Finance (shareholder) as well as the Rydal Hall Ltd board, who approved the 2017 budget submitted, with full explanation and context. A loss for the year was shown at 4.5%. This included price increases but no change in occupancy or usage. There is therefore upside available for the year end depending upon how quickly active marketing can be brought to bear.

A CAPEX approach had been adopted, with 3 projects identified (tea shop, hall front of house, campsite) and being worked on for board presentation and approval by the end of the assignment.

3 contracts were re-negotiated to the company’s benefit. 2 related to hiring ground space and 1 was the contracted out catering activity (kitchen food supply and chef services). Net effect on the 2017 budget is estimated to be c.3% of sales.

The estate management team operated a significant volunteer workforce which had introduced a relationship with a forces rehabilitation charity in 2016. This was built on for 2017 where teams of people came to work in the gardens, resident for a week at a time. This has worked extremely well for all concerned. As a result, food will be produced this year for use in the hall kitchens and tea shop.

The storm Desmond damage was pursued successfully and remedial works were identified and preparatory steps were being followed to enable the work to be done. By the end of the assignment the access road had been significantly improved and bridges across the beck on the estate were receiving attention.

Operationally, the new supervisory team gave focus to various elements. In the kitchen/dining area, issues were caused by a deteriorating main oven that has to work 24/7/365. A CAPEX was raised and approved to deal with this, along with an upgrade and extension of other related cooking equipment, improving kitchen ergonomics, hygiene and H&S standards.

Each area produced input to the budget process – the first time team members had experienced this.

Hall operations were reviewed for labour content so that adequate labour provision was built into the budget to cater for forecast seasonality. Contingencies were also considered for implementation as increased occupancy levels required.

A training day was organised for new team members covering some basics of management and team working/building including Belbin team roles.

Throughout the assignment, guest feedback had remained high. This is a great credit to all staff and volunteers. By the end of the assignment, staff morale was much higher and a positive, ‘can do/will do’ approach prevailed. A credit to the new management team.

Towards the end of the assignment, a Strategic Development paper was produced for the business, identifying areas for further consolidation and expansion. This was accepted by the boards.

Achievements:

Key outputs from the 4 month assignment were:

• Restructured the whole business, from management team down
• Established new Business Development and HR functions
• Provided a complete finance window on the company for timely use
• Ensured a move to electronic booking from ‘quill and parchment’
• Provided a 3 year development strategy
• Increased professional business competence within the team
• Improved staff morale and maintained very high guest satisfaction
• Recruited 50% of direct staff in 4-5 weeks to replace sudden losses due to visa issues
• Improved external relations with key groups
• Renegotiated 3 key contracts on behalf of the business, adding 3% on sales