Hotel Development PDF

HOTEL DEVELOPMENT CHAPTER 3 (…CONTINUED) 1  OBJECTIVES 1 2 3 4 5 6 Identify the steps Explain...

HOTEL DEVELOPMENT CHAPTER 3 (…CONTINUED) 1  OBJECTIVES 1 2 3 4 5 6 Identify the steps Explain how Evaluate the Outline the Identify the Explain the of hotel location importance of factors basic design concept of development influences completing involved in requirements ambiance from the success a feasibility obtaining of a hotel and its role in conceptualization of a hotel study and financial guest to grand opening interpreting the backing for satisfaction results before hotel building a new development lodging facility and operation 2 1. AN OVERVIEW OF THE PROCESS 3 AN OVERVIEW OF THE PROCESS 5. The Opening 1. Conceptualization 2. 4. Design and Feasibility Construction Analysis 3. Commitme nt 4  1. CONCEPTUALIZATION ◼ To sharpen the initial concept, a hotel developer needs to examine it from different angles. ◼ What is my source of capital, and how is the financial model going to provide return on investment? ◼ What is the required or expected return on investment? ◼ What are the macro market conditions affecting the lodging industry? ◼ Who is my target audience? ◼ What needs am I trying to satisfy? ◼ What are the micro market conditions in the surrounding area? ◼ Is there a large enough market? ◼ What size facility do I need? ◼ What can this hotel offer its guests as a uniquely positioned product that its competitors don’t or can’t? ◼ What are the currrent and projected demands for hotel room nights in the marketplace? ◼ Once the preliminary development concept is clarified, the ideas and goals can be formalized into concrete objectives. 5 2. FEASIBILITY ANALYSIS ◼ Is to determine whether the project is a feasible or capable of being carried out successfully. ◼ Based on a detailed study of the factors involved in opening and operating a successful hotel. ◼ The management will look for evidence that supports or rejects the predetermined concept. ◼ Will the proposed hotel generate enough profit to meet the expectations of its investors?’ ◼ The feasibility study also project the hotel’s rates and occupancy levels and estimate its operating expenses; it also determines the necessary capital investment needed for acquisition, construction, and ongoing operations. ◼ If these projections predict an acceptable return, preliminary design and development schedules are generated, and the project proceeds to the next stage—commitment. Marina Bay Sands Hotel - Singapore 6 3. COMMITMENT ◼ This stage is a critical turning point for the project. ◼ The developers must secure funding and begin negotiations with construction and management companies. ◼ If the project is to be developed in-house and not by a separate company, the key members of the in-house team are assembled and brought into the development process. ◼ If the development project is to be handled externally, the competitive bid processes are conducted to determine the best fit for the project in terms of cost and expertise. ◼ Funding must cover more than the cost of construction and the expense of operating until the hotel reaches viability (commonly referred to as stabilization). ◼ The operating margins and construction budgets must be decided on during this phase so they can be included in the design stage. 7  4. DESIGN & CONSTRUCTION ◼ Once the project team is fully committed and funding has been obtained, the actual design and construction of the hotel begins. ◼ The project is designed, built and equipped according to the recommendations of the feasibility study and the goals of the developers. ◼ During the design and construction phase, management or franchise agreements are formalized, and the management and operating staffs are mobilized. ◼ Preliminary marketing and personnel training usually begin during this stage. Mandarin Oriental Hyde Park, London 8  5. THE OPENING ◼ The final stage in hotel development is the actual opening. ◼ The sales and marketing staffs are fully operational, ensuring that the hotel will have guests from the first day. ◼ All front- and back-of-the-house staff are trained and prepared to welcome guests. ◼ Facility opens for business. Hotel Park Royal, Singapore 9  Sunway Iskandar Raises The Standard Of Township Creation 2. CHOOSING THE RIGHT LOCATION 10 CHOOSING THE RIGHT LOCATION 1. Airport ▪ Lots of factors contribute to the hotels’ potential Properties success, but the location is the most influential. ▪ This formula for success is supported by studies showing that most guests rate proximity high on 5. Resorts 2. their list of deciding factors when choosing a and Downtown place to stay. Attractions Choosing Properties the Right ▪ Lodging facilities may even be classified Location according to their location, that is airport, downtown, suburban, highway, or resort. 3. 4. Highway Suburban Motels Properties 4. DESIGN & CONSTRUCTION (..CONTINUED) 12  1. AIRPORT PROPERTIES ◼ Airport properties were originally built to house airline flight crews and those travelers whose flight were postponed, canceled or delayed overnight. ◼ Provides food and beverage services to passenger waiting for flight together with banquet, meeting and convention facilities. ◼ Such airport properties average a minimum of 100 guest rooms. ◼ They targeted local business groups and large organizations hosting regional conventions, and today they offer good-sized, quality facilities that save participants travel time between the airport and a convention facility. ◼ This marketing strategy puts airport facilities in direct competition with Hilton Frankfurt Airport, German downtown convention hotels. ◼ Usually offers quick and easy transportation to and from the airport, ranging from underground moving sidewalks to shuttle service. 2. DOWNTOWN PROPERTIES ◼ Due to the limited availability of land in the inner city and the high cost of developing in densely populated areas, downtown hotels usually are high-rise structures ◼ Tend to have higher average room rate than other types of hotels because of the expense of real estate and of doing business in a city. ◼ Serving predominantly business travelers and conventioneers. ◼ Higher occupancy rate on weekdays and lower occupancies on weekends. ◼ Normally offer flexible meeting, banquet space and limited recreational facilities. Hilton Columbus Downtown Hotel, Columbus, Ohio 3. SUBURBAN PROPERTIES ◼ Originally provided lodging for travelers who wanted quick access to the downtown area, but who did not want to spend the night there. ◼ May benefit from lower taxes and land costs, they are frequently restricted by other regulations including height and size-zoning guidelines. These regulations limit most suburban hotels to mid-rise with two hundred to five hundred rooms. Suburban Extended Stay Hotel, Washington  4. HIGHWAY MOTELS ◼ Developed with the growth of transportation. ◼ Serving transient guests who stay an average of one night, facilities are generally very simple one or two storey, exterior corridor structure with less than 200 rooms. ◼ Provide free surface parking and outdoor or enclosed recreational facilities for both business and leisure travelers. ◼ Unlike other types of properties, these facilities may have more than one building. Public space and registration areas may be separate from guest rooms. ◼ Usually, breakfast and workout Motel 6-Norfolk, VA, USA facilities are provided without charge 5. RESORT & ATTRACTIONS ◼ Located near a particular attraction or are attractions in and of themselves. ◼ Location is essential to their success. ◼ Often built away from population centers and transportation routes. ◼ Normally resort must compensate for any lack of infrastructure. ◼ Roads and utility systems may need to be developed, some resort even provide employee housing and off-duty employee recreational facilities. ◼ Some resorts were originally designed for the upper-middle class Layana Resort & Spa, Krabi, Thailand and very rich, creating destinations for one-stop vacationing. ◼ To survive, some resorts provide meeting and banquet facilities in order to stay profitable all year round. 3. ASSESSING FEASIBILITY Renaissance Cairo Mirage City Hotel, Cairo, 18 FEASIBILITY STUDY 4. FISCAL COMMITMENT TO THE NEW HOTEL ▪ Deciding to enter the hotel business is a big step involving the commitment of large amounts of time, money, energy and other resources. ▪ Developers turn toward investors for part, or all the financial backing needed. ▪ Commitment of development, pre-opening, and operating costs is necessary before construction begin Novotel Auckland Airport, New 20 Zealand 1. FINDING INVESTORS ◼ Investment practices change with the economic tide. ◼ Constructing new facilities was a good investment practice in the 1980’s; buying and renovating an existing structure was a better option for the 1990s. Sofitel Kuala Lumpur Damansara 21 2. DETERMINING COSTS ◼ A rule of thumb devised many years ago by prominent hotel architect suggested that $1 should be charged in room rate for every $1000 spent in the construction of the room. ◼ While this is not an exact figure, it does indicate the amounts of money involved in hotel development. Today, the rising costs of operating a hotel have manipulated the numbers so that a guest room which cost $10000 to build can no longer profitably be rented for $10. ◼ Pre-opening expenses occur during the construction of the property when key personnel are employed to plan the hotel’s operation and an advertising and/or public relations firm is enlisted. ◼ These costs, plus the costs of furnishing and decorating the hotel, landscaping the grounds, and stocking up on supplies like linens, uniforms, glass ware, and cleaning products may add from 50 to 75 percent more to the actual construction costs. 22 Burj Al Arab | Dubai  3. OPERATING COSTS ◼ Hotels need a constant supply of working capital beyond the development phase. Often the most significant expense in hotel operation involves wages, salaries and employee benefits. ◼ Other expenses include advertising and marketing plus costs for running any additional services such as recreational facilities and restaurants. Ark Hotel, 23 4. CONTROLLING COSTS Energy Efficiency Security and Loss Prevention Given the high costs of energy, ▪ Theft of any kind significantly raises the cost of engineers specify the latest in operating a hotel property. When it effects guests, energy-efficient equipment for use theft can irrevocably damage the hotels’ in new hotel construction. reputation. A hotel should have a built-in security system especially in the back of the house. ▪ Another area of security is safety and protection. Burj Al Arab | Dubai 24 5. DESIGN OF THE NEW HOTEL ◼ Once financing for construction has been obtain and all involved parties have committed to the project, construction planning begins. ◼ Owners and managers must be involved in this planning process because they are most familiar with guests’ needs, and because they will be the ones charged with making the facility profitable once it opens. ◼ The hotel’s design must satisfy two essential needs; to provide guests with a comfortable, safe environment in which they can enjoy their stay, and to allow hotel staff to keep the hotel operating efficiently to meet the needs of those guests. 25 Srinakarin Hotel, Bangkok, Thailand 5. DESIGN OF THE NEW HOTEL (…CONTINUED) 1) Front Of The 2) Back Of The House House ▪ Comprises all the areas the guests will contact, ▪ These are the support areas. (eg; kitchen, including the lobby, corridors, elevators, guest housekeeping areas, laundry and etc. rooms, restaurants, bars, and restrooms. ▪ The front of the house is completely ▪ It must be designed to sell the hotel to potential dependent upon the smooth operation of customers. the back of the house. ▪ “The architecture of the lobby may grab their ▪ Efficiency and control are the main initial interest, but it’s the guest room that keeps objectives for the back of the house. them coming back” ▪ Architects must plan for the smooth ▪ Other areas in the front of the house must be operation of the hotel without revealing its just as well planned. working to the guest. ▪ Hotel meeting facilities must also be carefully ▪ The plan must also enable employees to design to meet the conventioneers needs for enter and exit the building as well as to audiovisual equipment, large exhibition space perform their work out of sight of hotel and variety of meeting rooms. guests. 26  6. ACCESSIBILITY ◼ The facility must be accessible both in term of its location, and it terms of the facility design, which include security, independence, safety and comfort. ◼ All guests want to feel a sense of security when staying in a hotel, they will also ultimately stay where they feel most secure. ◼ Guests also want to feel independent. Simple amenities like easy-to-turn door handles and lowered light switches may help youngsters and guests with limited mobility operate more independently. ◼ Safety, a third design consideration, is essential for both guests and employees, providing a well-maintained property aid in the safety of all persons in the hotel. ◼ Finally, all guests expect to be comfortable. Comfort considerations might include easy-to-reach adjustable room thermostats (placed low on walls), wheelchair-accessible swimming pools and spas, remote-controlled televisions, wireless Internet connectivity, remotely controlled window blinds, voice recognition phone and messaging products, and Srinakarin Hotel, Bangkok, Thailand 27 multimedia connectivity to personal operating  7. AMBIANCE ◼ Ambiance is the complete impression a lodging facility gives to its guests. ◼ When planning a hotel or its renovation, designers create an image that carries out the initial conceptualization. From the choice of building materials to the color of the carpeting or tile. ◼ This image will become the theme of the entire property. ◼ A key element of ambiance that is being incorporated into hotel design is sensory perception. Sensory perception deals with the sights, sounds, and smells of the customer experience. ◼ Ambiance tells guests whether they are in an economy or luxury property; it makes them feel at home or uncomfortably in new surroundings; and it can make the difference between whether a guest returns to the property or stays Ark Hotel, somewhere else. 28 29