Listed@ASX Winter 2021

Redcape Hotel Group ASX:RDC

The hospitality group took decisive action at the start of the pandemic to protect its businesses, a move that is paying dividends.

The Redcape Hotel Group suffered along with the rest of the hospitality sector when the pandemic hit. “Stock prices in the industry were hit, including ours,” says CEO Dan Brady.

Yet, while others continue to struggle, Redcape’s performance has bounced back and satisfaction levels of staff and customers have also increased. Managing such an impressive recovery has been quite a feat.

“As an organisation, we’re committed to enriching communities through our hospitality and creating and nurturing an environment of trust,” says Brady. “Staying true to those values underpinned all of our decisions, including to become a communication company as a way of maintaining our relationship with our stakeholders.”

Calm and steady

The Redcape Hotel Group owns and operates 36 pubs in Queensland and New South Wales, mostly in Greater Sydney, along with 22 bottle shops, three venues with accommodation and The Australian Brewery. When lockdown was announced, Brady acted quickly to turn off distributions and protect the business.

“We needed to support our people and keep our assets in good condition, so we shut down pubs and secured our lending facilities into the future,” he says.

Meanwhile, Redcape was reviewing and updating its digital platform to ensure it stayed connected to customers. The company also provided a continuous flow of information for security holders, including the introduction of regular video updates.

“By using multiple channels, particularly video, we were able to paint a more complete picture of the steady, calm and deliberate approach we were taking,” says Brady. “We have a very loyal core register of small cap institutional and private client money and they were very supportive of our strategies. They also appreciated the high- touch connection and information.”

Staff and customers

Redcape also did its best to help staff and customers feel connected to the pubs, and to each other.

“We succeeded in keeping most of our workforce stood up and, during lockdown, the vast majority stayed in touch with each other and the business,” says Brady. “We worked hard to keep the nostalgia of a pub alive for our customers and, ultimately, the sense of belonging to the pub while they were stuck at home.”

Customers also helped to shape Redcape’s responses to the crisis.

“We have a 200,000-strong digital customer base and, two or three months into the pandemic, we asked about 20,000 of the most engaged whether they would be prepared to answer a few of our big questions,” says Brady. “Within 24 hours, 1,500 had agreed. We were in touch with them once or twice a week, and their responses gave us real-time insights into how they were feeling. That was another important input to our decision-making.”

Redcape included questions about any differences they might like to see when things became more normal.

“As customers weren’t able to visit our venues, we effectively had to win them back,” he adds. “The answers enabled us to fine tune our operations to align even more closely with all our customers.”
 

Distributions and donations

Brady was proud the team was able to turn distributions back on in the first quarter of 2021.

“We’ve also been able to provide guidance to the market for the full year, which puts us right back on our strategy of sustainable growth,” he says.

Redcape was also able to provide extra support for its 32 communities.

“In September, we launched our Publinc Communities platform where we matched pledge points earned by customers on every transaction in a hotel,” says Brady. “The first donation totaled $187,000, which was distributed across 60 community groups in our network. This year, we expect the donations to build to somewhere near $1 million.”
 

Learning from the challenge 

Brady believes Redcape has gained a great deal from navigating the challenges of COVID.

“We certainly learned a lot more about our customers and staff,” he says. “Even before the pandemic, we saw the value of drawing on feedback to build a virtuous loop, where high staff satisfaction leads to high customer satisfaction and then positive financial performance. Now we’re better at both listening and responding, which means we’re even better placed to use our values, purpose, digital platform and customer base to enrich the environment of trust which underpins continuing improvement in all of our metrics.”