An entertaining summary of the common mistakes of hotel developers and helpful tips on how to avoid them.

1. Hotel Development
From Concept to Construction
www.onyx-hospitality.com

2. From Concept to Construction
Why are hotels different?
• Overlapping end-to-end processes requiring complex
strategic decisions
• Unlike many other building types in that the entity
must be ‘fully complete’ and operating
• Major services, systems and IT involved
• Governed by trends, fashions and competition
• Often guided by owners lack of experience, emotions
and indecision
• Frequently hindered by statutory restrictions
• Often attracts Owners who have little or no
development experience

4. Bad Habit #1
Not understanding or defining objectives

5. Bad Habit #1
Not understanding or defining objectives
• Why are you building it?
• How are you building it?
• Is there an overall clear vision?
• Is the objective market driven, instinct driven, or
emotionally driven?
• Is the site right?
• Should you build it?
• What are you building?

6. Bad Habit #1
Brief & Owner
• Major problem often lies with Owner/Developer not
really knowing what they want
• Often a desire for a hotel is driven out of emotions
• Lack of trust and experience tempts owners to ‘go
alone’
• First time Owners often want the 3-Star Brand but
have a 5-Star expectation
• Maximising GFA is desirable but not always best
• Mixed Use developments have inherent challenges
• Thankfully ‘design’ today is more important - kudos

7. Bad Habit #2
Not understanding the market

8. Bad Habit #2
Not understanding the market
• Not enough research
• Too much research….
• What does the market really require
• What will demand drivers be when the hotel is
complete in 3 years +
• Will it stack up financially at that time
• Are there actually better options than a hotel
• Consultants correct interpretation of style, facilities,
size, F&B, etc. essential

9. Bad Habit #2
Available resources
• New owners often rely on instinct, emotions
connections and friends
• Various Real Estate and Hotel Analysts exist but
remember its only ‘advice’
• Walk the streets, stay in competition, understand their
Financials
• But don’t always believe them…..
• Consultants must be analytical and pragmatic in
interpreting these issues
• Form or Function should not dominate – successful
hotels balance both

10. Bad Habit #3
Not understanding the product

11. Bad Habit #3
Not understanding the product
• What product exists? What is needed in the market?
• Commit early to a Brand or identity and follow it
• Challenge the Operator to explain and understand the
chosen Brand
• Luxury is not always ‘the best’
• ‘Mixed Use’ is not always the best
• Resist Brand ‘creep’ outside defined parameters
• Get to know comparable products and competition
• Recognise how today’s technology and environmental
issues influence the industry
• Stay flexible – trends change

12. Bad Habit #3
Hotels ARE different
• An average 5 star hotel property requires upwards of
27 different consultants
• A hotel - by m2 - costs 4 times as much as an office
block and will take 3 times as long to build - beware
• In many emerging countries approvals and permissions
can hinder the process
• Few good PM companies know how to manage
process. Understand this before commitment
• 4’500 different items go in to a hotel – about 20 into
an office block
• A pre-opening budget can constitute over 10% of
project cost

13. Bad Habit #4
Not defining programme, quality or budget

14. Bad Habit #4
Not defining programme, quality or budget
• Major cause of dissatisfaction and disillusionment
• Define realistic time lines including design and site
acquisition
• Set quality objectives – preferably real examples of
benchmark hotels
• Engage professional help to determine realistic budget
with necessary contingencies and escalations
• Fully understand these issues at outset

15. Bad Habit #4
The role of hotel Technical Services
• We generally bridge the Operational and Technical
aspects of a hotel ensuring the integrity of a Brand is
largely maintained
• We also should span the Owner – Consultant divide
impartially
• We are generally paid as ‘consultants’
• However often seen by Owners as their ‘Project
Manager’
• Standards Manuals and their inherent dangers

16. Bad Habit #5
Not engaging or managing correct support

17. Bad Habit #5
Not engaging or managing correct support
• Select consultants on reputation and ability – not on
just price – select people not names
• Select contractors and suppliers on the same basis
• Ensure they all know the product and the locality
• Respect local relationships and integrate the
community….they are invaluable
• Clearly establish your guidelines and expectations
• Manage the Project Manager
• Resist involving spouses or relations in design!

18. Bad Habit #6
Not clearly defining owner involvement

19. Bad Habit #6
Not clearly defining owner involvement
• Nothing disrupts a project more than an inconsistent
Owner (and Operator)
• Owner must assign and delegate trusted, experienced
and knowledgeable personnel
• Trust your hotel Operator – he has usually done it
before!
• Make sure reporting information is accurate and timely
– get to know the bad news first
• Be realistic and nimble
• Get fully involved - or not at all!

20. Bad Habit #7
Not understanding hotel construction

21. Bad Habit #7
Not understanding hotel construction
• Construction processes may be similar but seldom the
same in different locations
• Investigate construction options – consider long term
benefit not short term savings
• Unless core business involves construction avoid trying
to fully control process
• Mitigate risk and delay through decisive and informed
planning – changes are costly and disruptive
• Understand market dynamics and trends – commodity
pricing, tender climate, labour costs, etc.
• There is no such thing as a cheap hotel!

22. Bad Habit #7
Opening a hotel
• Incredibly complex process – can last over 18 months
• Needs skilled focused teams and individuals
• Needs understanding from contractors and consultants
– indemnity, access, defects…
• Testing and Commissioning over 20 separate systems is
highly complex
• ‘Procurement to placement’ very involved process
• Define the soft and full opening
• Establish defects and responsibilities and processes
• ‘Programme, Prepare and Predict’

23. Top 10 Tips
for Hotel Developers

24. Top 10 Tips
for Hotel Developers
1 Understand the driving forces
behind your desire to build a hotel

25. Top 10 Tips
for Hotel Developers
2 Agree to budget, programme and
benchmark quality up front – even
before engagement

26. Top 10 Tips
for Hotel Developers
3 Engage an Operator up front

27. Top 10 Tips
for Hotel Developers
4 Integrate the right consultants at
the right time with the right ‘Matrix
of Responsibilities’

28. Top 10 Tips
for Hotel Developers
5 Resist Brand ‘creep’ outside defined
parameters

29. Top 10 Tips
for Hotel Developers
6 ‘Mixed Use’ is not always the best
option

30. Top 10 Tips
for Hotel Developers
7 Understand the governance
process. A hotel can take 8 years in
Vietnam!

31. Top 10 Tips
for Hotel Developers
8 Use international Fire Life Safety
standards

32. Top 10 Tips
for Hotel Developers
9 Don’t commit to the ‘unknown’

33. Top 10 Tips
for Hotel Developers
10 Beware of the ‘stop-start’ scenario
on your business