Selecting the right hotel development company is one of the most important decisions a hotel owner has to make. All of the final implications are significant and wide ranging. The selection process is quite complex as there are numerous factors to consider to ensure you select the right one for your property. Here are some steps the hotel owner should take:
- Creating a competitive environment
Many times, owners happen to make the mistake of selecting the first development company they meet. The company invites them to stay in the best property, in a beautiful suite and then enjoy a nice dinner with the principals of the company. The owners, thus, feel committed to them. Unfortunately not every hotel development company is equal. The terms of the contract can vary dramatically. Creating a competitive environment from the very beginning can force the manager of the company to negotiate the best deal possible and result in a more favourable outcome for the owner.
- Getting help
Hotels are not similar to the other classes of real estate. They are all operating businesses and the relationship between the owner and the operator is a complex one. Most of the development companies have extensive experience when it comes to negotiating agreements and utilising both in-house and outside counsel. The ownership must be red represented by the experts similarly. All the owners should be represented by the legal experts that specialise in the hotel development agreements. Owners with only limited experience in hotel development selection should also hire an experienced hotel asset manager to assist them through the process.
- Clarifying objectives
Maximising the value of their investment is the owner’s primary objective and is also the basis of most of their decisions. However, maximising the value is not as simple as it seems, and profit is not always the owner’s primary motivation. A developer planning to build a full service hotel in a high barrier to enter the urban market may be best served by keeping the hotel independent, negotiating the ability to terminate the management upon sale and then selling it soon after opening to a strategic buyer who would pay a good premium for the ability to bring in management and the brand. That, however, can also be a fairly risky strategy.
- Knowing the hotel
Each and every hotel is unique. Many of them do share similarities, but none of them are the exactly the same. Also, hotels are not simply a function of their room count and physical product; they are also defined by their location, the demand in the market, and their competition. The savvy owners always have a thorough understanding of their hotel regardless of whether it is an existing property or new construction.
Author’s Bio: The author is an avid blogger. This article is about hotel development companies.