With the end of financial year in sight, many hospitality businesses are putting together budgets for 2022-23, including CapEx (capital expenditure) projects.
Capital expenses are a necessary part of any tourism facility budget because they help maintain and grow your business, but they’re usually big investments, often funded through borrowing or even equity raising. Therefore, they will likely need Board approval. But how do you get your investors and stakeholders excited about a project so it gets over the line?
CapEx planning has always presented challenges for tourism businesses, but due to the pandemic, most 2020-21 plans were altered or scrapped altogether because of lockdowns, lost revenues and material cost increases. Many businesses put off CapEx projects to hang onto cash. But now visitors are coming back there’s renewed focus on better capital planning and execution in order to realise the potential of these big investments.
Assuming that you already have a CapEx project in mind, there are a few things you need to consider before getting Board approval. To build a business case, you need to understand several factors, such as:
- What will it cost?
- How long will it take?
- What value will it derive?
- Is your idea feasible?
- Will council allow it?
- Does it fit with your brand story?
At S2, we work with clients to explore the answers to these questions and understand how we can help frame an infrastructure investment within the greater story of where your business is going as part of a Pre-design Confidence Package.
Through this process, budgets start to take shape by discussing what will add value, what the top priorities are, and how to use brand character to shape buildings and make them work for you. Once we establish answers to these questions, flesh out ideas and determine whether your council will allow you to do what you want, you can get a much more accurate idea of CapEx project costs and timeframes.
Getting approval for a CapEx project involves putting all the elements – ideas, plans, budgets and goals – together in a big picture design strategy in order to excite and involve your investors and/or board.
At S2, we help our clients get projects approved by creating a simple representation of a concept idea – putting pre-design information into a 3-dimensional building concept that’s tangible – to justify the why, not just the how, to stakeholders. This includes an overall design strategy (and may include story boards, engineering reports, diagrams, images and more), to demonstrate that the scale and cost of your ideas are in line with expectations and that your plan has been thoroughly researched.
By planning correctly and engaging experts beforehand, your CapEx project will have a much greater chance of gaining Board approval. At S2 it’s a process we’ve gone through many times before and we know what will get it over the line. Contact us if you have a CapEx project in mind.