Hotel Management and Operations

The developer is the entrepreneur, the risk taker,who originates the idea for the hotel. Depending on the business structure selected, the developer often puts his or her personal wealth at risk when engaging in a hotel project. The developer, along with a small staff of people, networks with commercial real estate agents on the lookout for a suitable hotel site. De- pending on the type of hotel to be developed, a site of at least two to four acres is required (for comparison, an acre is roughly the size of a football field).This property must be zoned by the city for a hotel, be visible from a freeway or major street arterial, and have city approval for such construction activities as curb cuts, left- hand turn lanes, and delivery truck access.
Commercial realtors offer sites for the developer’s consideration that include maps, aerial photos, and proof of hotel zoning.

Sometimes the developer views potential sites by driving around the neighborhood within five miles of the site or touring multiple sites by helicopter, noting where the potential guests live and work and where potential competing hotels are located.

The price per square foot of the land is considered. The higher the cost of land, the higher the rates the hotel will need to charge.

Is the price too high for the average daily rate (ADR) in this particular market? Is it too low? Or is it acceptable? This is determined when the hotel financial pro forma budget document is created.

HOTEL - THE DEVELOPMENT COMPANY