Kangaroo Valley Escapes began as a small holiday accommodation business in the Southern Highlands of NSW. During the start up phase there were many issues:
Number two in the market: KVE was playing “catch up” against a well established competitor.
Small portfolio of properties: an inefficient operating scale.
Low customer awareness: therefore occupancy rates and booking revenues were low.
Systems: largely manual processes to begin with.
Over time, after KVE overcame its early challenges, with our help where required, the owners became aware that they did not have an exit strategy so that they could depart the business in a time and manner of their choosing.
What We Discovered
KVE was a challenger brand in the market. It wanted to do things differently, but it had limited resources.
Google search rankings were on the 4th to 6th page, and social media followers and engagement were extremely low. With very little organic traffic, it was highly dependent on third party channels to market, like AirBnB and Booking.com.
KVE could not clearly articulate how it could add more value to property owners compared to competitors.
The website and backend systems were not suitable for automated marketing processes or operating efficiencies.
During the initial start up and growth phase:
We first helped KV to position itself as a premium provider to both property owners and guests, in line with the founder’s values, with commensurate pricing.
We then helped KVE build the foundations for their own marketing channels, including a new website, growing social media followers and engagement, and lifting Google search rankings.
We designed targeted advertising campaigns to increase brand awareness and revenues to fund the investments in organic growth.
We advised KVE regarding automated workflow solutions to reduce administration work and risks.
We developed an additional “experiences” segment, adding value to the accommodation revenue streams.
The business was well on its way to becoming the market leader before the COVID pandemic. During that period we helped the founder to deal with a number of operating challenges on the people, customers and regulatory side, eg through helping KVE to revise its terms of business with both guests and property owners and deal with guest disputes.
After the pandemic, the founder then asked us to advise on steps to capitalise on the now much more valuable business through planning an exit strategy:
We identified business value enhancers and detractors – the levers that the owners could use to make the business more attractive to investors.
We helped the owners to map the market for potential investors, and articulate how KVE was a valuable business.
Once the business was positioned for the value the owners were seeking, we approached selected investors and confirmed their interest.
We prepared and negotiated the final term sheets with the selected merger partner, advised on deal completion through to final contracts and supported the due diligence process.
What We Delivered
In less than decade, KVE went from a start up with many common business challenges to the premium operator in their region for both property owners and paying guests.
Between FY2019 and FY2023, revenues grew by 110%.
By investing in the right growth and risk management strategies, KVE became very profitable and valuable as a business, despite all the recent challenges in the short term residential accommodation market and also those caused by the pandemic and natural disasters.
We worked closely with the founder to ensure that all recommended strategies were implemented in line with her strong values and low risk appetite, and without taking on external debt.
When the time came to merge KVE with another business, we ensured the owners stayed in control of the process and unlocked the returns on investment they were seeking, in the shortest time possible and with minimal process cost and risk.
Now the owners can look back with pride that they built and successfully exited a remarkable business that is truly the leader in their market.