Developers Should Know About Building with Operations in Mind

By Fred B. Roedel, III Partner & Managing Member, Roedel Companies, LLC | November 30, 1999

When developing a hotel, operations must be given priority standing. Operations are essential in order to get a hotel up, running, and producing revenue within a set timeline. Developers must spend the time required to integrate all aspects related to operating the hotel into the overall development plan at its inception. Failure to do so will inevitably result in costly delays. If you do not have an operations expert on staff, hire a consultant. Experienced operators are invaluable when it comes to establishing and meeting performance standards for the design, time, cost and quality of a hotel development.

How Operations Influence Hotel Design

Operators are in the best position to ensure that the final design of the hotel matches the operating organization necessary to maximize revenues, control expenses and deliver dependable free cash flow. In addition to providing important feedback regarding the coordination of the front desk and all of the back of house areas that support operations, they fully understand the importance of properly locating the various elements of a hotel in relation to one another in order to improve efficiency and reduce operating costs.

Too often hotels end up with far too much expense per square footage, which results in little or no return on investment. Finding the appropriate mix to maximize your opportunity takes an experienced operator. Typically he will label every square foot of space in a hotel as either revenue or expense in order to come up with the right revenue generating mix.

Operations Impact on the Development Timeline

The development timeline of any project is the time its takes to go from the first shovel in the ground to the point where revenue begins. A project's Return on Investment is affected by the length of this period. Unlike other asset classes, hotels have to be fully completed and operational from the first day of operations. A key performance standard that our firm constantly reviews is the total number of days that elapse between the issuance of a certificate of occupancy and the actual opening date. To reliably control this period time, it is crucial that a project's development schedule incorporate all of the operations tasks from start to finish. Anyone who thinks that an operator can work their money making magic on a property that is handed over to them only once it is built, without their prior involvement, is severely mistaken.

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.