The hotel development process follows the same path whether you are developing a boutique hotel or a luxury hotel. This is true for all hotels, although depending on the individual circumstances of your hotel development, there are some aspects that can or will change, especially if you want your project to be unique.
Choose a location
Choosing where to locate your hotel is usually the first step and this is a two-fold process. You will have to decide which city the hotel will be located in, as well as decide which city the hotel will be located in. All this will depend on the clientele you want to serve. For example, for a city known for its business districts, you can build a hotel that focuses on business customers. It will need to be located in a central location 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 of paramount importance 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 must have a complete idea of what your expenses will be, to know how much money you need to secure and take into account the cost of the land you are going to build on, the associated legal fees. development, general construction costs, and the costs of things like furnishing the hotel. Financing for hotel construction can come from two sources: commercial loans or investors. With the correct amount, any of these will suffice, although it is preferable to obtain a combination of both.
Choose whether to build or remodel
Purchasing the land and obtaining the necessary zoning variances, obtaining a franchise, and hiring a contractor will have to wait after financing is secured. Once that is resolved, you will have to choose whether you would 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 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 management required to run them properly, 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.