www.onyx-hospitality.com

Hotel Development

From Concept to Construction

From Concept to Construction

Why are hotels different?

• Overlapping end-to-end processes requiring complex strategic decisions

• Unlike many other building types in that the entity must be ‘fully complete’ and operating

• Major services, systems and IT involved • Governed by trends, fashions and competition • Often guided by owners lack of experience, emotions

and indecision • Frequently hindered by statutory restrictions • Often attracts Owners who have little or no

development experience

Bad Habit #1

Not understanding or defining objectives

• Why are you building it? • How are you building it? • Is there an overall clear vision? • Is the objective market driven, instinct driven, or

emotionally driven? • Is the site right? • Should you build it? • What are you building?

Bad Habit #1

Not understanding or defining objectives

Bad Habit #1

Brief & Owner

• Major problem often lies with Owner/Developer not really knowing what they want

• Often a desire for a hotel is driven out of emotions • Lack of trust and experience tempts owners to ‘go

alone’ • First time Owners often want the 3-Star Brand but

have a 5-Star expectation • Maximising GFA is desirable but not always best • Mixed Use developments have inherent challenges • Thankfully ‘design’ today is more important - kudos

Bad Habit #2

Not understanding the market

• Not enough research • Too much research…. • What does the market really require • What will demand drivers be when the hotel is

complete in 3 years + • Will it stack up financially at that time • Are there actually better options than a hotel • Consultants correct interpretation of style, facilities,

size, F&B, etc. essential

Bad Habit #2

Not understanding the market

• New owners often rely on instinct, emotions connections and friends

• Various Real Estate and Hotel Analysts exist but remember its only ‘advice’

• Walk the streets, stay in competition, understand their Financials

• But don’t always believe them….. • Consultants must be analytical and pragmatic in

interpreting these issues • Form or Function should not dominate – successful

hotels balance both

Bad Habit #2

Available resources

Bad Habit #3

Not understanding the product

Bad Habit #3

Not understanding the product

• What product exists? What is needed in the market? • Commit early to a Brand or identity and follow it • Challenge the Operator to explain and understand the

chosen Brand • Luxury is not always ‘the best’ • ‘Mixed Use’ is not always the best • Resist Brand ‘creep’ outside defined parameters • Get to know comparable products and competition • Recognise how today’s technology and environmental

issues influence the industry • Stay flexible – trends change

• An average 5 star hotel property requires upwards of 27 different consultants

• A hotel - by m2 - costs 4 times as much as an office block and will take 3 times as long to build - beware

• In many emerging countries approvals and permissions can hinder the process

• Few good PM companies know how to manage process. Understand this before commitment

• 4’500 different items go in to a hotel – about 20 into an office block

• A pre-opening budget can constitute over 10% of project cost

Bad Habit #3

Hotels ARE different

Bad Habit #4

Not defining programme, quality or budget

• Major cause of dissatisfaction and disillusionment • Define realistic time lines including design and site

acquisition • Set quality objectives – preferably real examples of

benchmark hotels • Engage professional help to determine realistic budget

with necessary contingencies and escalations • Fully understand these issues at outset

Bad Habit #4

Not defining programme, quality or budget

• We generally bridge the Operational and Technical aspects of a hotel ensuring the integrity of a Brand is largely maintained

• We also should span the Owner – Consultant divide impartially

• We are generally paid as ‘consultants’ • However often seen by Owners as their ‘Project

Manager’ • Standards Manuals and their inherent dangers

Bad Habit #4

The role of hotel Technical Services

Bad Habit #5

Not engaging or managing correct support

• Select consultants on reputation and ability – not on just price – select people not names

• Select contractors and suppliers on the same basis • Ensure they all know the product and the locality • Respect local relationships and integrate the

community….they are invaluable • Clearly establish your guidelines and expectations • Manage the Project Manager • Resist involving spouses or relations in design!

Bad Habit #5

Not engaging or managing correct support

Bad Habit #6

Not clearly defining owner involvement

• Nothing disrupts a project more than an inconsistent Owner (and Operator)

• Owner must assign and delegate trusted, experienced and knowledgeable personnel

• Trust your hotel Operator – he has usually done it before!

• Make sure reporting information is accurate and timely – get to know the bad news first

• Be realistic and nimble • Get fully involved - or not at all!

Bad Habit #6

Not clearly defining owner involvement

Bad Habit #7

Not understanding hotel construction

• Construction processes may be similar but seldom the same in different locations

• Investigate construction options – consider long term benefit not short term savings

• Unless core business involves construction avoid trying to fully control process

• Mitigate risk and delay through decisive and informed planning – changes are costly and disruptive

• Understand market dynamics and trends – commodity pricing, tender climate, labour costs, etc.

• There is no such thing as a cheap hotel!

Bad Habit #7

Not understanding hotel construction

• Incredibly complex process – can last over 18 months • Needs skilled focused teams and individuals • Needs understanding from contractors and consultants

– indemnity, access, defects… • Testing and Commissioning over 20 separate systems is

highly complex • ‘Procurement to placement’ very involved process • Define the soft and full opening • Establish defects and responsibilities and processes • ‘Programme, Prepare and Predict’

Bad Habit #7

Opening a hotel

Top 10 Tips

for Hotel Developers

Understand the driving forces behind your desire to build a hotel 1

Top 10 Tips

for Hotel Developers

Agree to budget, programme and benchmark quality up front – even before engagement 2

Top 10 Tips

for Hotel Developers

Engage an Operator up front 3

Top 10 Tips

for Hotel Developers

Integrate the right consultants at the right time with the right ‘Matrix of Responsibilities’ 4

Top 10 Tips

for Hotel Developers

Resist Brand ‘creep’ outside defined parameters 5

Top 10 Tips

for Hotel Developers

‘Mixed Use’ is not always the best option 6

Top 10 Tips

for Hotel Developers

Understand the governance process. A hotel can take 8 years in Vietnam! 7

Top 10 Tips

for Hotel Developers

Use international Fire Life Safety standards 8

Top 10 Tips

for Hotel Developers

Don’t commit to the ‘unknown’ 9

Top 10 Tips

for Hotel Developers

Beware of the ‘stop-start’ scenario on your business 10

Top 10 Tips

for Hotel Developers