CALINAYA, KIM JELLIE KATE A.

07-22-18
HTM-103
MRS. ANNE MARIE BAUN

Whether you are developing a boutique hotel or a luxury hotel, the process for hotel development
follows the same basic path, although there are some aspects that can change based on the
individual circumstances of your hotel development.

The first step is choosing where you are going to put your hotel. This is two-fold. You want to
choose the destination, meaning which city
the hotel will be located in, as well as
determining where in that city the hotel will
be located. This depends on what kinds of
customers you are catering to. If you are
looking to focus on business customers,
you most likely want to have a hotel
located in a city which is a center for many
businesses, and be located at a place in that
city where the headquarters for the
businesses are. If you want to start a tourist
hotel, you will want to be located in a place
that is a tourist destination, along with
having a location that provides easy access
to those attractions. For the most success,
you should strike a balance between
business and vacation travelers, so that you
can have the highest occupancy.

Getting financing is also important when it

comes to hotel development. To do this, you need to come up with a strong business plan that
includes things like the cost per room for building and operating the hotel, the expected
occupancy rates, and what types of rates you plan to charge per room. You need to have a
thorough idea of what your expenses are going to be, so that you know how much money you
need to secure, and take into account the cost of the land you are going to build on, legal fees
associated with the development, general construction costs, and the costs of things like
furnishing the hotel. You can finance the building of the hotel either through investors in that
hotel or through getting a business loan, although a combination of both can be preferable.

After securing financing for the project, there will still be things to do such as purchasing the
land and getting any zoning variances that are required, securing a franchise, and hiring a
contractor. Some things you most likely would have already dealt with when developing the
idea for your hotel such as whether you would build a new building from scratch or remodel an
existing building and what the look and feel of your hotel is going to be. If you are going with a
national brand to market and manage your hotel, the brands can provide designs for their
prototypes, which will save you a lot of design fees, and also be more attractive to your lenders.

Please be aware that hotel development and operation is a very risky proposition, and you must
have sufficient capital reserves to be able to fund development cost over runs and periods of
operating cash shortages. Hotels are among the riskiest type of real estate development because
of the short-term nature of the leases, and the amount of management needed to run them
properly. However, the hospitality industry can be very rewarding as well. Obtaining
experienced advisors and partners are your best bet to ensure a successful development.