Having the title secured is the very first step, because without it, even the most compelling development option may be worthless. A site valuation is essential, to calculate the equity share that the land owner will receive, or as a basis for negotiation lease payments.
Ensure the feasibility study is done by market experts, and covers not only what you want to build, but also asks for a review of the best use. It is possible you might wish to develop a 500 bedroom luxury hotel, but a best use study might show that a 150 bedroom mid-market property would be more financially rewarding.
It is essential that the architect understands hotels / resorts and, if a management company is likely to be engaged to operate the completed hotel, that the overall design meets basic international brands standards.
We have seen examples where a hotel has been commissioned with almost no back of house areas, meaning that the hotel could not function properly.
At this stage, only preliminary costings are required. These need to be reviewed for completeness, and interrogated for conformity with the design.
Undertaking a valuation will ensure that the scheme makes good financial sense. If you are spending more money on the property than it will be worth, the scheme needs to be adjusted.
Ensuring the right management company is instructed to run the hotel on the right terms is essential, to ensure the hotel is as successful as it can be, with the highest possible asset value.
Once the management company is on board the final design of the property can be concluded. It is essential this is done only when the requirements of the specific management company have been taken into account.
Once the final design has been concluded then final planning consent can be sought and secured.
The final funding package can now be agreed. This is likely to involve and update on the earlier valuation, taking into account the latest changes. Careful choice of financial advisor will enable you to secure the best possible lending terms.
Care must be taken in getting the tender process drawn up. The form of contract should be considered and all conditions and owner’s requirements specifically set out. This should include provision for interim sign-off stages between owner and operator as may be stipulated in the Management Agreement between the operator and the owner.
- Overseeing the construction process requires years of experience in hotel development. Coordination between trades is vital as is on-site quality supervision. Regular site visits and meetings with all professionals and the contractor to monitor progress and resolve any issues on site are a standard requirement.
- Fit-out and commissioning Once the building is ready for fitting out, all furniture, fittings and equipment must be placed in the correct locations as detailed in the design specifications. This includes checking the inventory; positioning furniture; hanging all artworks; tuning and ‘burning in’ kitchen and laundry equipment; testing Fire & Life Safety systems, IT network and telephony and TV systems, training staff in equipment operations; and preparing an asset register for the entire development.
Time and money need to be committed to the pre-opening of the hotel, from the early administrative functions and sales efforts to selection, recruitment and training of staff.
Following opening of the hotel, asset registers need to be concluded, final supplier accounts drawn up, and the hard work of making the hotel operation successful begins. The owner, assisted by an asset manager, needs to monitor and measure the performance of the operator on a regular basis.