MOST GREAT HOTELS ARE DEVELOPED BY AN EGO. MOST HOTELS ALSO BECOME PROFITABLE AFTER TWO OWNERS. THE FIRST TWO GO BANKRUPT.
This is no secret. This is taught at hotel school except most who actually build these things don't check with us!!
How can we save these 'dummies' and guide them in the right direction? We can help them. There are many of us who can assist these 'Dummies' from making those ridiculous decisions from the heart and those of their families...and then lose the family fortune.
It is a glamorous business for the operator, the client and the third owner. For the 'Dummie' whose idea it was to build it in the first place, it is a headache. In fact it may ache even lower than that!
Here are the rules, basic and easy to read.
- Do not decide to build a hotel, let the decision be realistically made by the Market Study.
- Do not imagine a hotel or get the wife involved. This is not a heart issue.
- Do not judge your future success by the difficulty of finding a table on Saturday night at the neighbouring restaurant. Restaurants lose money in all hotels.
- Do not anticipate an investment from the hotel operator.
- Do not think you can run it yourself.
- Do plan of having 25% of the development cost ready when you start.
- Do not plan on guaranteed financing unless conditions are puurrffecct!
- Do plan an exit strategy. This means getting your appreciated investment out.
- Do not plan on profits in the first few years even if the market study says so.
- Do consult a professional. Most of us have grey hair and have made all the mistakes in the book.
- Only if there is demand should a hotel be built.
- If there is no demand, plan on creating a destination which takes huge amounts of capital and more imagination.
- Be patient and realise that hotel groups want 7 basics in place before agreeing to manage it. And they do not invest!!
- Nice property is not a good start. A great market is!
- Huge amounts of capital is not a good start. Every penny counts in the early stages.
- If you have a lot of ego, go back and read the headline.
- If you are a Dummie, talk to an industry pro. We don't bite.
- If you are not a Dummie, still talk to an industry pro.
- It costs more to build where the labour is cheap.
- The returns are greater where the labour is cheap.
There are no stock answers to hotel development questions and so you should ask as many as you want. For every question, we have several answers. Some of us will tell you what you want to hear and the rest of us are honest.
For more information, contact [email protected]
Recent Comments