You’re in hotel development to make money. From Step 1 when you build or purchase your hotel to the Final Step when it comes time to cash in your chips, there are critical steps you must take to maximize your ROI and your hotel’s resale value.
Of course, there are a million-and-one smaller other actions that take priority in the years between. Those decisions also involve strategic planning and wise day-to-day oversight.
You may be building from the basement up or retrofitting an existing structure to suit your hotel brand. In a nutshell, you’re concerned with these factors:
While anyone can point to a beautiful beachside oasis as the perfect spot for success, competitive market trends have a huge impact over time. How would your brand adapt to an increasingly saturated market or significant demographic changes? Those questions have always burned in hospitality investors’ minds, but they’ve caused them in recent years to rethink how they spend their money.
(Helpful hint: Setting up shop along a major highway isn’t as impactful as it once was.)
You can do simple landscaping upgrades to spruce up your hotel’s external appeal for guests (and curb appeal for potential property investors). You can go a step further by performing large-scale land-altering overhauls:
If you can accommodate the upfront capital investment, breaking ground for such improvements could pay untold dividends in the end.
FF&E components (that’s short for furniture, fixtures, & equipment) are pieces installed but unattached to a hotel’s formal structure. These assets include (but are not limited to):
Taken collectively, FF&E pieces are pervasive throughout any hotel brand, adorning each room with potentially thousands or even millions of dollars in added value. Upon resale, a new brand may opt to install its own FF&E components, but your pieces certainly will have value somewhere and in some form.
Each asset can carry a price, however depreciated, to prop up your hotel’s resale value in smaller increments.
(Remember: FF&E components are worthless if they’re damaged. Choose an experienced FF&E installation team to ensure they’re moved safely from A to B and assembled with a professional touch.)
Buy low and sell high, right? While the market can be cyclical, we all know predicting those ups and downs is easier said than done. But as a general trend, hotels reach optimum trade or resale value 3-5 years after opening.
But you must also consider the surroundings - the writing on the wall, if you will. What’s going on around your hotel property? What’s the word in travel? What’s happening in the political realm?
A working crystal ball would be wonderful. Unfortunately, none exists. Staying on top of market trends and analyzing SWOT (strengths, weaknesses, opportunities, and threats) will help you make informed decisions.
The hospitality industry in recent years may seem a freewheeling game of ownership poker. That’s because it is. Today’s hoteliers, in both the franchise and boutique sectors, have a strong emphasis on growth by brand and property acquisition.
In the grand scheme, you must:
A well-placed hotel with strategic property perks to improve the guest experience now will mean greater ROI later when the time comes to sell.