Hotel development for dummies


After a blog about common mistakes made by aspiring hotel owners on, I decided to collate some of the recommendations made by international hoteliers and professionals alike. When asked what they would recommend to novice hotel developers, the following responses were given:

  • Understand the LOCAL market. RE is a local game.  SATURDAY, JULY 14, 2012 | JEAN KEIJDENER
  • It used to be sexy to develop on major intersections in the supurbs with limited service boxes, because with a strong flag the revenue stream seemed solid. Due to the limited services, the expense ratios appeared to promise good profits and cash flow. Then more flags showed up on the same corner, and the investment payback was more distant in the future, because they were engaging in rate wars. Then, the box got tired before they got their money back....not a good way of doing motel business.That entire scenario played out in every market, and the commodityzation hurt the industry overall.Full service is where it's at, especially in the boutique sector. Sell the ambience and the experience, not the commodity. Just like you want to sell the sizzle along with the steak.Most hotel guys do not truly understand how to create and train and deliver these experiences, unfortunately....THURSDAY, JULY 12, 2012 | VOLKER WESTPHAL
  • Why am I investing?When you get the truth to that question, you may stand a chance of guiding them to the right set of decisions. if they can't articulate that in one sentence that makes sense to an investor, suggest they take an Aspirin, lie down and wait till the feeling passes.If all else fails, explain to them that experienced advice saves them time and money, and hope they can see that the two are linked. WEDNESDAY, JULY 11, 2012 | KEVIN B MURPHY
  • Get your market and feasibility study done before you buy the land. Build for the market, not your ego. Understand the hidden costs associated with building hotels. They're long term investments that are some of the most difficult assets to manage!  WEDNESDAY, JULY 11, 2012 | YVETTE JONG
  • Key question I would ask:"why should I believe you?"" what about your performance in the past makes you believe you can accomplish the proforma for this asset"Yvette, you have raised questions that are core to ones reputation. Can they perform or not. Great job .  WEDNESDAY, JULY 11, 2012 | SI SLOMAN
  • A well-capitalized developer capable of paying the costs necessary to cross the initial hurdles until investors have come in is essential. Too many developers own the land (typically with substantial debt) and then look to professionals to work without compensation until that (distant) day when the financing is procured, thereby making their professionals co-venturers.Albert PucciarelliPartnerMcElroy, Deutsch, Mulvaney & Carpenter LLP.  WEDNESDAY, JULY 11, 2012 | ALBERT J. PUCCIARELLI
  • The Educational Institute of AH&LA has an excellet book: "Hotel Investments Issues & Perspectives" (4th Edition) that should be required reading for anyone who wants to develop (or acquire) a hotel. WEDNESDAY, JULY 11, 2012 | SCOTT BRUSH
  • Before you do anything, get operational expertise. Then you know what to add. Listening to music is not the same as playing it. TUESDAY, JULY 10, 2012 | ESMAIL LOTFI
  • great advice! WEDNESDAY, JULY 11, 2012 | CHRIS LEUNG
  • Put your personal opinion away and let professionals convince you it is viable and profitable.  TUESDAY, JULY 10, 2012 | PEDRO CASTELBLANCO
  • There's research that shows women investment managers tend to have better records than their male counterparts. Perhaps there should be more women decision-makers calling the shots on hotel development, too. TUESDAY, JULY 10, 2012 | TERESA MATSUI SANDERS
  • What? You mean it's not "Build it and they will come." TUESDAY, JULY 10, 2012 | MARK S
  • Understanding your primary target market is the bear minimum and you will be one more in the crowd no matter how deep pocket you have. Find a blue ocean and focus on a core competency, work your branding and staff turnovers, captivate your public and trully recognise their loyalty both for staff and guests. Going beyond via small but constant gestures and create a trully memorable experience can be done with little or no money and will generate better responses from all your stakeholders. A good idea is just an idea and not a business if not feasible and sustainable in the long run. TUESDAY, JULY 10, 2012 | CAIO MERINO
  • One only has to look at some of the problems now created in the hotel industry in continental Europe in the midst of the Euro crisis to see why Yvette makes a really good point about the over-saturated markets! TUESDAY, JULY 10, 2012 | SIMON FINLAY
  • Lack of experience in hotel development.  No deep pockets to stand behind the project. Watch out for management contracts and their fine print.  Balance the ADR with the project cost.  Where will you get your staff from. Who will train them and lead them. TUESDAY, JULY 10, 2012 | BERNARD MICALLEF
  • Location, location, location! TUESDAY, JULY 10, 2012 | ANGELO MACCAFERRI

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Craft House Founder and Director, Yvette Jong, contributes regularly to her HOTELS Magazine Blog titled, "The Good, the Bad and the Funky." Topics of discussion include all aspects of hospitality development, operations, branding, marketing, human resources, sustainability and much more.