The hotel development process follows the same path, whether you are developing a boutique hotel or a luxury hotel. This is true of all hotels, although depending on the individual circumstances of your hotel development, there are some aspects that may or will need to change, especially if you want your project to be unique.
Pick a location
Choosing where you are going to locate your hotel is usually the first step and this is a two-fold process. You will have to decide in which city the hotel will be located, as well as decide in which city the hotel will be located. All this will depend on the clientele you want to serve. For example, for a city known for its business districts, you might build a hotel that focuses on business clients. It will have to be located in a central place in that city where most of the company headquarters are located. If your ideal business is located in a tourist destination, you should start a tourist hotel that caters to travelers and provides easy access to tourist attractions in the city. Striking a balance between business and vacation travelers is paramount because your success, not to mention increased occupancy, will depend on it.
Acquire Financing
The next step in hotel development is to acquire financing. To do this, you need to put together a solid business plan that includes things like the cost per room to build and operate the hotel, expected occupancy rates, and what types of rates you plan to charge per room. You need to have a complete idea of what your expenses will be, so you know how much money you need to secure and factor in the cost of the land you are going to build on, any associated legal fees. development, general construction costs, and costs for things like furnishing the hotel. Hotel construction financing can come from two sources: business loans or investors. With the correct amount, either of these will suffice, although a combination of both is preferable.
Choose whether to build or remodel
Purchasing the land and obtaining the necessary zoning variances, obtaining a franchise, and hiring a contractor will all have to wait after the financing is obtained. Once that’s figured out, you’ll have to choose whether you’d build a new building from scratch or remodel an existing building. You will also need to decide how your hotel will look and feel. Building a new hotel from scratch will be a demanding task, but it will give you creative control over the design process. On the other hand, franchising a national brand will be more attractive to your lenders and will save you a lot on design fees because hotel brands provide designs for their prototypes.
Developing and operating a hotel is a very risky business and your capital reserves should be able to finance development cost overruns and periods of operating cash shortages. Due to the short-term nature of leases and the amount of administration required to execute them correctly, hotels are among the riskiest types of real estate development. However, it can still be very rewarding to be an important part of the hospitality industry. The best way to ensure a successful development process is to get experienced advisors, consultants, and partners.