5 minute read
IF CONCEPT DESIGN FAILS, BRAND OR STARS DON’T ADD VALUE
BY JOSE PINTO
Most people invest in hotels with the intentions of making a profit, but many often end up failing.
Strangely enough, hotel failures are always preventable– harshly bleeding the asset columns of “knowledgeable experts” who violated the wisdom and principles of a sustainable Hotel Investment. Hundreds of Hotels with amazing potential are barely scraping by and their owners continue to pouring in money hoping that, “someday”, they will actually see profit.
The concept design is rooted in traditions of the hospitality. Since ancient times, the development of many diverse types of hotels, brands and services has occurred in many cultures, but they always start by design conception, some of them taking years on this stage.
Today it seems that everyone is an expert and before anything, they start by architectural design “as they dreamed “with the help of Architects Companies that have no experience at all in Hotel concept design.
After 45 years in the hotel industry I have seen many successes and failures.
The last few years I have gotten more and more directly involved in the businesses of Hotel Investments and I have seen a clear difference in revenue and profitability in hotels where the project definition starts right.
There are hundreds of points that increase the revenue potential and therefore the ROI of an hotel or resort, which architects, designers and investors are not deeply looking at either by not knowing or?
I would just like to innumerate points that you as an investor or Owner should CONCENTRATE ON:
FIRST – DO NOT ALIGNED WITH THE WRONG PEOPLE
I mean ensure that you contract the right professionals. The most expensive thing you can do is to hire an inexpensive amateur or company to engage in your decisions.
SECOND – DON’T BE BURNED BY WRONG OR NOT ACTUALIZED MARKET STUDIES
Poor marketing studies or rundown over year’s statistics can be deadly costly.
THIRD - PAY ATTENTION TO YOUR LOCATION
Your investment can be set to fail if your location is weakening over time. Ensure you have strong concept even if it takes time to identify.
FOURTH – POOR ASSUMPTIONS.
Underwriting assumptions (assumption of risk) as commonly said are obvious factors that can take you to make bad decisions and ultimately can be a cause of a very slow ROI or a Total Failure. I’m surprised to see and listen how many investors are making decisions on poor or incomplete or outdated information, assumptions or for trusting the wrong people or consultants. It’s terrible to hand your hotel over to the bank or private investment companies due to poor assumptions, feasibility etc.
FIFTH – COMPETITION and MARKET ENVIRONMENT.
Update your marketing studies and adjust the concept and your feasibility over the time to win or the competition can complicate the existence of your business if you don’t have the right concept to start with. Be ahead of them.
THE FINAL WORD
The Covid-19 has accelerated trends and brought many of us to the ancient roots of real hospitality forcing the hoteliers to review the fundamentals of their value proposition and go beyond the traditional definition of a hotel as a “place to sleep, eat and look at views”. Indeed, the sole value of a hotel can no longer be based nor limited by its physical asset or location. Like on past the content creation and diversity of services, venues and product has become an important subject as decisions and ultimately can be a cause of a very slow ROI or a Total Failure.
I’m surprised to see and listen how many investors are making decisions on poor or incomplete or outdated information, assumptions or for trusting the wrong people or consultants. It’s terrible to hand your hotel over to the bank or private investment companies due to poor assumptions, feasibility etc. So it is important to have the involvement of a hotel expert from the development and design stage of a new hotel project.
There are still owners and developers that simply create a hotel/resort and place in someone’s lap to manage, but forget that location and interior design.
To unlock new area of growth, hotel investors across the world start to transform their dream into new concepts that break conventional hotel/resort and once they do it they become long term winners. It is well worth the investment to put more thought into it prior to starting any architecture design or construction. Look out of the box for new concepts and design opportunities.
