CREATOR’S can assure you that your possible thoughts as owners on how to develop and build your hotel or resort, that this will be a lengthy and indeed an expensive process. There can be quite a few, and there are various, reasons as to why owners want to invest in hotels instead of other real estate businesses. The main reasons can range from expectation, of high returns on investments or to attach a luxury hotel or resort product to their portfolio of existing businesses.
There are quite numerous types of hospitality projects that can be developed and they can be in many different forms or shapes. They range from hotels, resorts, boutique, convention centres, serviced apartments, and theme parks to time-shares. They can either be stand-alone or be part of a mixed-use development with a combination of hotel, apartments, offices and/or shopping mall.
It goes without saying that hospitality projects are different from any other type of real estate investments, which is primarily due to their daily occupancy and revenue fluctuations, the necessity for specialized management, and intensive labour requirements, in fact, they are perishable goods!
It is important for the owners to understand the cyclical nature and dynamics of the various hotel markets it wants to operate in, this is critical to know as part of an intelligent investment and decision-making process.
An initial analysis of market and financial feasibility will be perhaps the most important aspect of the decision-making process of hotel/resort investments. Due to many complications in the development process, high investment requirements, as well as the long duration of the development and construction process, it is important to properly understand every aspect of the development process as to avoid costly mistakes and time delays which in the end can impact heavenly on opportunity costs.
When CREATOR’S starts developing your hotel or resort, the development process always starts with a clear concept and understanding as to what outcome the owners are expecting. For instance, an owner should weigh in and choose between the below-mentioned variables in the initial process:
- Hotel, Resort, Boutique, Mixed Use or Hotel Lifestyle Concept
- Budget, Economy or Luxury Category
- Small, Medium or Large in Size
- Limited service or Full service
- Catering to Business or Leisure Guests
- Contemporary Architecture or Traditional Outlook of the Hotel/Resort
- High-rise Building or Spread Out
As can be seen this list the choices can be endless depending on the owner’s preferences.
Let CREATOR’S Develop and Build Your Hotels and Resorts
The hospitality development process by CREATOR’S typically starts with an idea or concept.
There may be an instance where the owners are already aware of hotel developments and operations due to their experience with similar business models or the owners can be completely new to the industry.
The initial step is to look for and hire a Development Consultant, such as CREATOR’S that can advise on the right procedure to develop and build your hotel.
This enables you to work with us as your trusted development partner. We typically charge a development fee, which is normally a percentage of the total project cost, for the services that we provide.
The development process typically starts with scouting for a site for the proposed hotel development, in some cases owners may already have a suitable site. The land can be purchased outright or can be leased if there is an option for that.
CREATOR’S recommends that owners commission a simple pre-market study before a site is selected. This is usually done, when there are few sites to select from, this study would enable them to evaluate and select the best possible location and site.
The next step would be to create an ownership entity or name for the proposed hotel by registering it as a company. This special purpose vehicle will enable them to do business under that company or hotel name and enter into contracts with various people, during the development and construction process. Once the hotel is open, they can, later on, operate under that name.
When CREATOR’S starts the process to develop and build your hotel, there will come a time whereby the owners need to decide if they wish to manage and operate the hotel yourselves together with your own management team or would take on the services of a hotel management company to manage the hotel. It is also the time for the owners to contemplate, if they desire to manage the hotel under an independent name or to associate themselves with any particular brand, by considering taking on a franchise for reservation and revenue generation for the rooms, marketing exposure for the hotel, expertise as well as numerous other reasons.
The owners should be aware that if they wish to associate themselves with a brand through a franchise agreement, that they will have to comply with specifications and standards for that brand during the construction and hotel operation stages. The franchisors do charge an initial fee during the signing of the agreement, which can run into tens of thousands of dollars.
Another critical aspect is the raising of finance and loans from various sources for hotel developments. This is an important and often overlooked aspect that must be dealt with in the early phases of hotel development.
Additionally, during the early stages, it would be advisable to deal with the local authorities for licenses and permits in order to start with the development and construction process.
The importance of a well-formulated Business Plan during the development and the build a hotel process cannot be emphasized enough as it forms the basis for the very existence of the hotel or resort. It should include objectives, goals, vision, mission, SWOT analysis, financial statements etc. This would also assist in the raising of finance for the hotel, as most investors insist on a well-executed Business Plan before they consider financing or investing in the project.
Once the initial financing process has been concluded the time has come for getting the whole project team on board. CREATOR’S team members will come on board at various stages of hotel development and construction phases. Their main purpose is to help prepare the required documentation for approvals, refine the concept, design and implement the idea, the DNA.
CREATOR’S Will Design Your Hotel or Resort
The size of the CREATOR’S project team would vary depending on the size of the hotel, but the following persons will always be required on any hotel development team:
- Development Consultant
- Architect [Planning & Design]
- Interior Designer
- Techncal Advisor
- Various Engineers [Structural, Civil, Mechanical, Electrical, Plumbing]
- Quantity Surveyor
- Landscaping Architect
- Fire Life Safety Consultant
- Legal Advisor
- Project Manager
- General Contractor/Construction Manager Sub Contractors
- Accountant
- Various Consultants (Food Service, Kitchen, Laundry, Lighting, Feasibility, FF&E etc)
- Operator (Franchisor) Representative (if Franchising is considered)
- Purchase Coordinator
Next comes the bidding process for Construction and bids from Construction Companies are called for and the selection of the General Contractor is done, which will lead to the actual Construction process and Project Management.
Once the construction process is through and the required Furniture, Fixtures and Equipment are installed and the punch list is cleared, the project is transferred from the project team to the operations team, which is the start of the hotel pre-opening stage.
The owners then select the Management Team and the staff during the pre-opening process, which will ultimately lead to the actual opening of the Hotel.
To summarize the whole development process to develop and build a hotel or a resort see the following steps as below:
- Identify site
- Acquire Land
- Obtain third-party feasibility, environmental, geotechnical and design study
- Develop an initial 5-year operations budget and construction budget
- Draft preliminary drawings
- Engage architect and engineers for complete plans and budget
- Arrange franchise license
- Conduct and complete interviewing and bidding process for contractor
- Establish scheduling of all building phases
- Commence construction
- Provide extensive construction project management services
- Begin the pre-opening process
- “Punch out” final building and obtain a certificate of occupancy
- Open the Hotel for business
Click here for a detailed example of a typical Project Brief or Outline which outlines all the important information pertaining to the planning of the project.
So What Are The Next Steps?
CREATOR’S next thoughts would be on the necessity of creating a business plan for building your hotel or resort. Can you really do it without one??? We absolutely don’t think so! Remember the scouts? “When you fail to plan, you are planning to fail!”
It goes without saying the developing a hospitality project is a daunting task and not to be handled without a proper team and experts in place! Our team of experts and consultants can assure you that any project is not without its risks but if then again if the risks are properly managed and the project will be successfully executed. Owning a well-planned hotel or a resort can be a very rewarding and long appreciating asset to any prospective owners.
So why not discuss your plans with our experienced and innovative CREATOR’S team and let our successful track record show you how we can help you to create a successful realisation for your property development endeavours!
Thank you, Bert Bykes @Contact