Planning for “what ifs” paid dividends when COVID-19 hit vacation industry

The challenge

In March 2020, the resort industry came to a grinding halt. Companies ceased business travel, large events were called off, families cancelled vacations and the world started to go into lockdown. With millions of cancellations and empty hotel rooms, the resort and hospitality world faced unprecedented challenges and the tough decisions that came with it. However, the treasury team, lead by Sasha De Gracia, Director Finance – Treasury Services, was prepared.

“In the year leading up to the pandemic, the team was busy implementing a new working structure and process automation initiative that would put our company in greater control over our strategic financial operations and allow treasury to become the steward of financial information and intelligence,” says Sasha De Gracia.

The industry is seasonal and inherently exposed to potential volatility caused by random “acts of God” as the coronavirus pandemic illustrates only too well and, as with any calculated risk, the company must always be ready financially.

Given the nature of its industry, the company had the following objectives:

• Property acquisition: to enable this to happen, the CFO and executive team needed a precise and real-time picture of the cash and liquidity positions.
• Long-term project budgeting and funding: it is necessary to routinely invest in property enhancements and upgrade projects. The company manages numerous long-term, phased, multi-million-dollar development projects across all properties.
• Bank relationship and services optimisation: given the highly acquisitive strategy, the firm typically opens a number of accounts per property. Banking relationships must be managed holistically across entities and properties. The goal was to streamline these relationships in order to negotiate the best terms.
• General financial visibility and stamina: as De Gracia recalls, “while no-one could have anticipated the magnitude and breadth of this current crisis, financial stamina and endurance turned out to be the greatest, most critical objective for the treasury team. From the outset of this pandemic, visibility and a precise pulse on our liquidity was, and continues to be, our lifeline.”

The challenges with achieving these objectives was that treasury operations were extremely manual and internal functions were highly disparate and isolated.

The solution

To enable digital transformation, the treasury team chose TreasuryXpress’ cloud-based, treasury management solution. With their new technology partner, they have created a controlled and centralised hub for managing liquidity collaboratively and with a long-term view. Full bank connectivity was established in just 12 weeks.

Best practice and innovation

The company established automated data feeds from banks to aggregate balance and transaction data across all accounts and entities in real time. They also centralised bank account management to eliminate redundant contracts thereby greatly reducing fees and improving terms.

They established automated balance tracking on credit lines and revolvers to improve short-term liquidity management through the use of virtual accounts, achieved automated account and transaction reconciliation and implemented historical, data-driven forecasts to understand liquidity requirements and anticipate shortfalls.

Key benefits

• By improving bank relationship leverage, the team has made considerable savings in annual fees.
• By automating credit line and revolver balance management and reconciliation, the team has realised an impressive first-year saving.

The treasury team approached this project with the mission of mitigating risk and optimising liquidity, to prepare their business for the “what-if’s”.

“Fast forward to the COVID-19 crisis. We have experienced an unprecedented slowdown, and the team put their achievements to the test. We have been able to fully understand how to best support our employees – lessening lay-offs and minimising furloughed staff. The pandemic hasn’t changed our mission; it has highlighted the good work that we did,” explains De Gracia.

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