Before we are going to outline the proper hotel resort development process for CREATORS planned properties, let us share the following outline on a typical hotel resort development process which is lengthy and can be quite expensive if not well planned. In this generic example, there are many reasons as to why an investor wants to invest in resorts instead of other real estate businesses.
Their two main reasons are either a high return on investment or they like to attach hotel resort development property to their business holdings.
Hotel Resort Development Process Needs Rational Planning
Photo Courtesy of https://en.wikipedia.org/wiki/Rational_planning_model
Any hotel resort development process requires rational planning as there are many possibilities and numerous types that can be considered for development such as hotels, resorts, meeting, incentives, convention and exhibition centres, serviced apartments, theme parks or even timeshares. They can be stand-alone or lately with soaring land prices in the Asia Pacific it is becoming more feasible to utilize mixed-use developments with the hotel, meeting facilities, apartments and a shopping mall.
Hotels and resorts are different from any other types of property investments primarily due to their daily occupancy and revenue fluctuations, it is open 24 hours every day! It requires full-time management and depending on the level of services provided can be very human resource insensitive.
For investors and owners to make sound investment decisions it is imperative that they fully understand the cyclical nature and dynamics of the hospitality industry. It is important that an initial analysis of market conditions and financial feasibility for development is fully understood during the initial decision-making process.
Due to the nature of resort development, which can take depending on any complications from 3-5 years starting with the DNA concept to design and construction, it must be important that there will be a long gestation period and high capital investment for return on investment. We must ensure that investors have a proper understanding of every aspect of the development process to avoid costly mistakes and cost overruns, therefore it becomes critical to have a well-planned and clearly articulated project concept for success.
Hotel Resort Development Process and Concept
We at CREATORS put high importance on any hotel resort development process to ensure that it starts with a clear concept as to what outcome the developer is expecting. It should be clearly discussed that the investors understand the possible variables in the initial process which also could be depended on their investment capital.
To develop the hotel resort development concept, the following choices are to be considered:
- Hotel, Resort, Condominium, Mixed-use, Themepark etc..
- Budget, Economy or Luxury category
- Small, Medium or Large in size
- Limited service or Full service
- Catering to Business or Leisure or Mixed guests
- Contemporary or Traditional outlook
- Highrise Building or Spread out
The list can be endless depending on the owners and investors preferences, the hotel resort development process typically starts with a concept and an idea.
There may be an instance where the owner or investor is already aware of hotel and operations due to their experience with similar business models or more often than not the investor can be completely new to the industry.
So it will be important to plan for the next step, and that is whether to look for and engage an experienced Development Hospitality Advisor from a firm such as CREATORS, who can advise on the right procedure to start with the hotel resort development process, they normally charge a development or retainer fee which is a percentage based on the total project cost, for the services they provide.
Other option for owners would be to establish a development company themselves and get all the specialists on board and coordinate all the process themselves.
CREATORS hotel & resort development process typically starts with the potential site selections for the proposed property, in most cases the owner’s do already have a site. Most sites are either purchased outright or on long-term leases if there is an option for that. Many investors usually commission a pre-feasibility study before a site is selected. They usually will do it on an average of 3 sites, to select the best possible one.
The next step would be to create an ownership entity or working name for the proposed property by registering it as a company. This is recommended to enable owners to do business under that entity enter into contracts with the consultants, financiers, contractors, licensing and legal people, during the development and construction phases and later on to operate the property under that name.
Most of the times owners will have decided or are about to decide, whether they want to manage the property themselves or would are entering into a Hotel Management Agreement with an established branded operator for more marketing and revenue exposure. Owners need to understand that once they are associated with a brand that is required to comply with brand standard manuals, architectural and engineering specifications and standard operating procedures during construction and operation stages. Owners should also be aware that there are substantial initial fees during the signing of the Hotel Management Agreement as well as technical services fees during the development and construction phases, which runs into many ten’s of thousand dollars.
So What To Do Next? What are your thoughts on the best possible hotel or resort concept that could work well in South East Asia?
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 CREATORS team and let our successful track record show you how we can help you to create a successful realisation for your property development endeavours!
To Your Succes!
Bert Bykes @Contact