FINANCING A HOTEL SUCCESSFULLY IS LIKE COOKING A STEAK PERFECTLY.
It is quite simple. Timing, ingredients, the market and experience is critical......but success is buried in the touch, the feel and the presentation.
If you really know how to serve a steak right, you know how to buy it.....from the market, age it...... in the air, you know how to butcher it on the block, and you know how to deliver that perfect cut of well-measured meat to the range..... at the precise time that a customer will walk in and expect perfection.
......and the fat. Must have some well placed fat. Marbling is critical, a nice term but it is fat. Many companies are cutting out the fat and becoming lean and mean. Not sure this is the right approach in all cases. In the service industry, a little fat is good. Fat is experience, character, taste and without it, the meat is dry, fibrous & boring.
Same as marble actually! A little marble in the lobby or bathroom is tasteful. Too much is overkill.
Timing, experience, calculation, planning, analysis. Patience, vigilence, careful recruitment, training, more training, mistakes, successes and then recognition.
It took me a lifetime to get the steak right. it has taken me a lifetime to get the hotel business right. Now we work on the development which typically stalls at the point of financing where seven or eight boxes need to be ticked before the starter pistol is triggered.
Here is how I see it.
These are my Top Ten Steps to financing, preparing, branding and opening a sizzling hotel successfully or delivering a Steak similarly. Both with some marble but not too much.
- The Land. The Steak is the Land. It must have the right credentials. The right cut, the right mix of lean, clean, fat, texture and maturity. Location is critical as is cost. And its no good if it is still owned by someone else.
- The Plan. The Design or Master-plan is the Recipe or the Dining Experience. Except who uses a recipe for a steak? Meat alone is a bore. Land alone...ditto. Meat without potatoes for some or without bearnaise for others is almost inedible. Add some crisp, colourful vegetables, a 'jus' or deglazed pan juice and the violins start to be heard. A little vino in a special glass and the orchestra strikes up. A great steak in a poorly presented restaurant also loses value. Conversely, a well-chosen design architect will creatively develop the style, the impact, the creative edge and the character that will differentiate the product from its local competion and provide an opportunity for a resort to compete with a remote resort on a different Continent both catering to the same equidistant client.
- The Brand. The Branding is the Style, the address, the reputation,the image and the sizzle. Equate this to the right cut of meat that lends itself to either Raw as in Tartare, a Grilling, a Blackening, a Braising or a Stew. Defining the star category of the property and matching it to an appropriate brand will determine the level of investment necessary and the likely rate of return.
- The Team. The Rotissier or Grill Cook represents the Team. An experienced team represented by the farmer, the purchaser, the storeman, the butcher, the Chef, the Manager and the Service Delivery team. There are others and they are all integral to the successful delivery of that Steak. The Developer must produce a team of equally qualified, experienced specialists with prior track records in the industry. Architects, Engineers, Kitchen Designers, Marketers, Feasibility consultants, Contractors, Project Managers and all must function as a team.
- The Financing. Seed Money is needed to get started for delivery of the Steak. The team must be paid, trained, motivated, the ingredients bought, stored, cared for, prepped and the customers identified, counted, marketed and the table laid. Without some skin in the game, the project will not get financed.
- The Risks.Absence of risk is a critical piece of the puzzle. Bad refrigeration, overstocking inventories of meat, lack of impeccable hygiene, no grilling experience, all are risks by themselves. A project without similar key ingredients is an even larger risk....and so political stability, market demand, environmental tests, reliable valuations, credible feasibility by third party consultants, all pose levels of some risk which must be evaluated.
- The Past Performance. Revenue & Expense History is a recap of the business success enjoyed by the Restaurant and its Partners. Without records of a couple of years of their business and tax returns of the Owners, no lender will finance against poor performance or skimpy developers. However if you have never sold a few steaks and had some money left over for replacing them, chances are uou are on your own going forward.
- The Checks & Balances. Restaurant cleanliness is a given, as is an environmental assessment on the land. No clean bill of health, no support from a lender. Market Feasibility........either way, no diners, no sales. Asset Value 'as-is' and 'as-planned'. Just a well prepared, well researched report by a 3rd party recognised independent consultant.
With all boxes ticked, a project can be discreetly financed in a heartbeat. If you are missing a couple of those boxes and still need help, contact, firstname.lastname@example.org
By the way, Steak photo from one of my favourite US Steakhouses, The Palm.