The hotel development process is different from developing other types of asset classes because hotels are operating businesses and as such, a sophisticated operator can be required to maximize performance and asset value. This five-part series will serve as a brief overview of the major aspects of hotel development:

  1. Location
  2. Brand
  3. Finance
  4. Development
  5. Operations

If you do not have sophisticated hotel operations and development experience, it is important to engage with an operator early on to guide ownership through the process and provide early insights that can prevent costly mistakes later in the process. The Sea Glass Hospitality Partners team has provided these services for numerous owners and investors throughout North America and can work with you and your investors through every step of the process. We built our careers and reputations on being the someone owners believe and trust in to maximize their properties’ potential.

Location

The first step in developing a new hotel is to identify a suitable location. A hotel site can benefit from a strong corporate presence in the area or proximity to leisure demand drivers such as major tourist attractions. In an ideal scenario both factors will be present thus providing a healthy mix of corporate and leisure demand accounting for weekday and weekend business. Another encouraging sign is if there are other hotels in the area that are operating successfully. STR (formerly Smith Travel Research) is a worldwide leader in competitive market intelligence in the hotel space and their customized reports can provide information on supply and demand near the proposed hotel site. Sea Glass Hospitality Partners can take the market intelligence as provided by STR and other sources to run an initial pro forma model and determine if continuing with the process makes financial sense in line with the specific criteria of ownership.

The next post will cover the brand selection process.