A Closer Insight into the Hotel Planning & Development Process

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23/05/2018 - Hospitality

At TFG Asset Management (TFGAM) we are actively involved in the hotel planning and development processes underway at The First Group. We also work with renowned operators, including Wyndham Hotels & Resorts, Millennium Hotels and Resorts and The Ascott Limited. From our experience we have identified the different challenges that hotel developers and operators face during the planning and development phases.

It is crucial that both parties understand each other’s objectives during this crucial phase to ensure a strong and lasting working relationship, and ultimately, deliver long-term success.

Hotel developers aim to obtain the highest possible yields from their investments and one of the easiest ways to achieve this is to reduce construction costs. Operators will push to invest more in the development of the product to ensure it meets their brand standards. However, sometimes these operational strategies may not be in tune with local market demands.

In this scenario the hotel asset management team needs to use their operational expertise to analyse the additional investment required to meet certain brand standards and advise if it will generate greater operational efficiencies in the long run. The hotel asset manager must always protect the interests of the owner during the hotel’s development phase.

To achieve this, the hotel asset manager must analyse every aspect of the hotel’s operations to ascertain whether certain brand standards will enhance its ability to generate revenues.

Operational expertise and due diligence on the part of the hotel asset management team is what will allow the owner to make the right choice.

When selecting an operator, TFG Asset Management considers the local reach and flexibility of the operators’ technical team. Having a technical services team located close to the hotel is vital during the development process.

Dubai is also a very unique market and most international hotel operators have experience dealing with local specifications and regulations.

Time is of the essence when developing a hotel and any construction delays will inflate costs and impact potential long-term revenues.

Typically, international hotel operators have certain suppliers they prefer owners to work with, who provide them with attractive rates. The same can be said for hotel developers. Consequently, a key challenge is selecting the best suppliers for a particular hotel project. The hotel asset manager is key to balancing the respective interests of owners and operators. Being an independent party places the hotel asset manager in an ideal position to assess the relative merits of working with any particular supplier with a view to safeguarding the hotel’s future profitability.

A new hotel development presents a very costly investment. By working with an experienced asset manager, the hotel owner can rest assured their investment will be safeguarded and their asset will be leveraged to its maximum potential.