Rezidor is exposed to operational and financial risks in the day-to-day running of the business. Operational risks occur mainly in running the hotels locally but also include implementation risks related to margin enhancing initiatives launched centrally. Such initiatives include, inter alia, gaining market share, cost-cutting programs, room growth and asset management activities related to the existing portfolio. Financial risks arise because Rezidor has external financing needs and operates in a number of foreign currencies. To allow local hotels to fully focus on their operations, financial risk management is centralized as far as possible to group management, governed by Rezidor’s Finance Policy. The objectives of Rezidor’s Risk Management may be summarized as follows:
- Ensure that the risks and benefits of new investments and financial commitments are in line with Rezidor’s Finance Policy
- Reduce business cycle risks through brand diversity, geographic diversification and by increasing the proportion of managed and franchised contracts in the portfolio
- Carefully evaluate investments in high risk regions and seek returns that exceed higher cost of capital in such regions
- Protect brand values through strategic control and operational policies
- Review and assess Rezidor’s insurance programs on an on-going basis
- Review and assess Safety & Security procedures.
For more details, please download the full Annual Report 2016 here