Tivoli: The Insider Story
Saving Christmas
On that December morning, when the Executive Committee gathered, the atmosphere was heavy. The Espírito Santo Group had collapsed in the summer, business activity hit the usual lows of the low season, and payments were starting to lag. It was time to initiate the “PER”.
PER stands for Special Revitalization Plan, a rather positive term. It’s a recent legal concept aimed at giving some breathing space to viable companies that need to reorient themselves. Unfortunately, the “PER” being a relatively unknown procedure and also occasionally misused by non-viable companies as a way to buy time, it has a very negative connotation, often interchanged with the term “insolvency,” which is precisely what it aims to avoid.
Our concern was to hold the news until January, so as not to ruin the Christmas of our employees. But from that point on, close and open communication with partners and staff would be a determining factor in maintaining their support.
A groundwork laid in advance
The sale of the Tivoli Hotels & Resorts business had been decided by The Espírito Santo Group (GES) since the end of 2013. An international market consultation was conducted with the support of an investment bank, including all standard due diligence procedures, resulting in almost two dozen proposals, later reduced to a shortlist. The selection by the Rio Forte holding company of Minor Hotel Group (MHG) as the preferred bidder occurred already at that time.
Regardless of everything that would happen from July 2014, when the recovery of Rio Forte is denied by the Luxembourg court, making the sale to MHG unfeasible and leaving us in self-management, the determining foundations for saving Tivoli had already been built in the preceding years.
Repositioning the brand and renewing the product
When I joined Tivoli in June 2007, the company was in turmoil. New top management, new ambition, plans for evolution as a major player in the hospitality sector.
It was time for rebranding and repositioning the brand, developing the “Experience More” brand concept, opening new flagship properties like Tivoli São Paulo and Victoria, mass portfolio renewal, and innovative partnerships with major international brands—Banyan Tree, Groupe Flo, Sergi Arola, Purobeach, etc.
In two years, Tivoli went from a recognized but stagnant brand to a dynamic, innovative, and trendy brand – “the place to see and to be seen.”
Direct Hit
At the end of 2008, the international crisis hit us hard, and we immediately hit the brakes. The investment plan was frozen, and anticipating some difficult years in terms of top-line revenue, we started an Operational Efficiency Program (OEP), spanning the entire organization, resulting in “full-year” savings of €5.4 million at the time, corresponding to 7% of our turnover.
It was a defining moment for the organization’s culture, preparing Tivoli for a phase where cost control would prove essential. From then on, each budget or forecast exercise would be a mini-OEP in itself.
Preparing for the change in the economic cycle
In 2012, as international economies revived, anticipating the approach of a recovery cycle, we began a deep restructuring project of our commercial platform.
The governance was changed, giving greater autonomy and agility to the commercial area. A major investment was made in revenue management, evolving from two part-time employees to eight full-time employees and becoming the center of commercial decision-making. We developed electronic distribution, avoiding dependence on traditional channels and leveraging yield management. In parallel, the commercial action plan was directed even more towards international markets, reducing dependence on the domestic market, which weight would decrease from 32% to 14% in 4 years.
In the biennium 2014-15, the results appeared: a 22% increase in Rooms Revenue, a 16% increase in Total Revenue, and more than a doubling of EBITDA.
Luck is earned
Looking back, it’s not difficult to understand how the organization was able to overcome successive obstacles—from financial constraints in 2009 to property seizures in 2015—and transition to a new and promising phase, within an international reference hospitality group, with prospects of strong investment and international brand projection. Tivoli always knew how to anticipate cycle changes and adapt, taking advantage of each stage to learn and build something: a brand and a reference portfolio in the years of the owner group’s commitment, a highly efficient organization in years of retraction, and a cutting-edge commercial platform in the change of cycle.
It is said that hospitality is an industry of people, for people. I agree. It’s in difficult times that the importance of 80 years of trust and seriousness in commercial and labor relations is understood. There were hundreds of commercial partners and suppliers who continued to believe in Tivoli and did not withdraw their support. And, last but not least: our teams. More than 1100 employees who never gave up, who always remained focused on business and customers, without revealing the challenges that the context presented to them. And achieving ambitious goals, improving the company’s results year after year…
These are the true heroes of this story.
Written by Filipe Santiago
January, 2021
This article was published in Publituris. You can access the online version here.
