Step By Step Guide To Build A Hotel

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 1

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 2 Preface The thought of owning a Hotel or a Resort can be very exciting for most of us, either if it’s a big Star Rated Hotel or a small Budget Hotel, Motel or Bed and Breakfast. Developing and Building Hotel involves careful coordination of various activities ranging from Concept Planning to the Grand Opening of the Hotel. Step By Step Guide To Build A Hotel E Book will explain in detail, on the various aspects of Hotel development, Construction and Pre Opening, in a simple and practical way. It covers various aspects of Hotel Construction and Development process ranging from Site selection, land purchase and Leasing Land, Hotel Financial projections, Hotel Feasibility Study, Hotel Project Cost Estimate and Budget, Hotel Concept development, Hotel Design Guidelines for Hotel Exteriors, Lobby, Guest Rooms and Corridors, Food and Beverage Outlets, Kitchen, Laundry, Swimming Pool and other areas of Hotel. This E Book also covers details on the different Approvals, Permits and Licenses needed in Building and Operating a Hotel. It Covers Information on Hotel Construction Planning, Hotel Project Management, information on Hotel Franchising and Hotel Management Contracts. The all important issue of Raising Finance and Loans for the Hotel Development and Construction is also covered. Selection of Hotel Furniture Fixtures and Equipment and Hotel Operating Supplies and Equipment is also explained. The importance of Hotel Business Plan and the Hotel Star Classification Process is also detailed. Final phase of the book would cover the Hotel pre opening details and the budget phase, before the hotel actually opens. It covers information on the equipment that is required to operate a hotel, in various departments of the hotel. Enjoy Reading this Book

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 3 Table of Contents Introduction to Hotel Development 4 Hotel Business Plan 13 Hotel Feasibility Study 26 Hotel Financial Projections 33 Site Selection and Land Acquisition 41 Hotel Licenses Permits and Approvals 48 Hotel Project Team 59 Raising Finance 63 Hotel Franchising and Hotel Management Contract 69 Hotel Project Cost Estimate and Budgets 77 Hotel Concept Development and Design 86 Hotel Design Guidelines 90 Kitchen Design 117 Food and Beverage Outlet Design 126 Laundry Design 136 Hotel Construction 139 Hotel Project Management 161 Hotel Furniture Fixtures and Equipment 192 Hotel Star Classification 198 Hotel Pre Opening Planning 232

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 4 Introduction to Hotel Development Hotel Development is a lengthy and expensive process. There can be various reasons as to why an investor wants to invest in Hotels instead of other Real Estate Business: which can range from high return on investment or to attach a Luxury Product to their portfolio of existing businesses. Accommodation operation can take many forms, ranging from Hotels, Resorts, Convention Centers, Serviced Apartments, Theme Parks or Time Share. It can be on its own or can be a mixed use development with a combination of Hotel, Apartments and Shopping Center. Hotels are different from other types of Real Estate investments primarily due to their daily occupancy and revenue fluctuations, the requirement for specialized management, and labor intensity. Understanding the cyclical nature and dynamics of Hotel markets are critical to good investment decision-making. An initial analysis of market and financial feasibility is perhaps the most important aspect in Hotel investment decision making. Due to many complications, high investment and long duration of Hotel Development and Construction process, proper understanding of every aspect is important so as to avoid a costly mistake. Hotel development process should start with a clear concept as to what outcome the developer is expecting. For instance an investor should weigh and choose between the below mentioned variables in the initial process: • Hotel, Resort, Condominium, Mixed use Etc • Budget, Economy or luxury Category • Small , Medium or large in Size • Limited service or full service • Catering to Business or leisure Guests • Modern Architecture or Traditional outlook of the Hotel

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 5 • High rise Building or Spread out The list can be endless depending on the Owners/Investors preferences. The Development Process typically starts with an idea. There may be an instance where the owner or investor is already aware of Hotel operation due to their experience with similar business models or the investor can be completely new to the industry. The initial step is to look for and hire a Hospitality Consultant who is either an individual or a firm, who can advise on the right procedure to start with the Development process. Other option would be to take the services of a Development company. Development companies charge Development Fee which is a percentage of the total project cost, for the services they provide. The Owners can coordinate the whole development process themselves if they have the time and Knowledge. It also depends on how big the project is, which usually dictates the number of specialists on board. There are many firms that offer turn key developments, who would design and also build, handling the whole development and Construction process themselves. Other option for Owners would be to float a Development company themselves and get all the specialists on board and coordinate all the process themselves. This Development Company In Future can undertake various third party Hotel Development Projects for a fee. The Development process typically starts with the Site Selection for the proposed Hotel Project, in case the Owner does not already have a site. The land can be purchased outright or can also be leased if there is an option for that. Many investors usually commission a pre feasibility study before a site is selected. They usually will do it on an average of 3 sites, to select the best possible one. The next step would be to create an Ownership entity or Name for the proposed Hotel by registering it as a company, for it to do business under that Company/Hotel Name, enter in to contracts with various people, during the Development and Construction process and later on to operate under that name, once the Hotel is open.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 6 Then would come a stage for the Owners to decide if they want to manage the Hotel themselves with their own Management or would have to take the services of a Hotel Management Company to manage their Hotel. This is the time for the owners to contemplate, if they want to manage the hotel under an independent name or associate themselves with any particular Brand, by considering a Franchise for Reservation generation for the Rooms, Marketing exposure for the Hotel, Expertise and other reasons. Owners should note that if they want to associate themselves with a brand through Franchise, then they have to comply with Brand specifications for that Brand during Construction and Hotel operation stage .These Franchisors also charge an initial fee during the signing of agreement, which run in to thousands of dollars. Raising finance and Loans for Hotel Development from various sources is also an important aspect of Hotel Development. Another important aspect would be to deal with the local authorities for licenses and permits to start with the Development and Construction process. The importance of a well Formulated Business Plan during the Development Process cannot be ruled out as it forms the basis for the very existence of the Hotel, specifying its Objectives, Goals, Vision, Mission etc.This would also help in raising finance for the Hotel, as most of the investors insist on a good Business Plan, before even considering Financing or Investing. Then its time for getting the whole project team on board. They will come on board at various stages of Hotel Development and Construction Process. Their main purpose is to help prepare the required documentation for approvals, refine the Concept, Design and implement the idea .The team would vary depending on the size of the Hotel, but the following persons will always be on any Hotel Development Team: Owner Developer (if Development is done by a Development Company) Architect Interior Designer Various Engineers (Structural, Civil, Mechanical, Electrical, Plumbing) General Contractor/Construction Manager Sub Contractors Quantity Surveyor Landscaping Architect Legal Advisor Project Manager

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 7 Accountant Various Consultants (Food Service, Kitchen, Laundry, Lighting, Feasibility, FF&E etc) Operator (Franchisor) Representative (if Franchising is considered) Purchase Coordinator Next comes the bidding process for Construction and bids from Construction Companies are called for and the selection of General Contractor is done, which will lead to the actual Construction process and Project Management. Once the Construction process is through and the Required Furniture, Fixtures and Equipment are installed and Punch List is cleared, the project is transferred from the project team to the Operations team, which is the start of the Hotel pre opening stage. The Owners then select the Management Team and the staff during the pre opening process, which will ultimately lead to the actual opening of the Hotel. To summarize the whole Development and Construction process briefly: • Identify site • Acquire Land • Obtain third party feasibility, environmental, geotechnical and design Study. • Develop initial 5 year operations budget and construction budget • Draft preliminary drawings • Engage architect and engineers for complete plans and budget • Arrange franchise license • Conduct and complete interviewing and bidding process for contractor • Establish scheduling of all building phases • Commence construction • Provide extensive construction project management services • Begin pre-opening process • "Punch out" final building and obtain a certificate of occupancy • Open the Hotel for business Below listed is a Hotel Project Checklist or Project Brief, outlining all the important information pertaining to the Project.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 8 Hotel Project Brief Name of the hotel : Address : City : Hotel’s proposed date of opening: Distance from the city centre : Distance from the air port: Distance from the railway station : Distance from main bus stand : Nature of business of promoting company: Brief profile of directors: Name of the consulting companies used for the project Architect : Structural Engineer : H.V.A.C consultant : Electrical consultant : Plumbing consultant : Fire & safety consultant : Facility planning : Interior Designer : Landscaping : Name of the Contractors used for the project Building : H.V.A.C : Electrical : Plumbing : Fire & safety : Interiors execution : Landscaping : Manufacturer quantity capacity Air conditioning plant Diesel generator

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 9 Hot water boilers Steam boilers Guest elevators Service elevators Kitchen equipment Laundry equipment Electrical panel Water treatment plant Sewage treatment plant Epabx Plant, machinery & equipment ii Land information Title of land – lease hold / free hold : Period of lease : Date of purchase / taken on lease : Previous owners (if any) : Relationship between the previous and present owners : Is it an approved hotel site: Permissible Floor Space Index : Proposed Project cost Land (including site – development): Building : Plant & machinery : Furniture & fittings : Office equipments : Vehicles : Other articles (to specify): Total project cost incurred: Cost per key (w/ land): Cost per key (w/o land): Owners / promoters contribution: Project funded by : Loans : Name of the financial institution / bank: Rate of interest: Proposed financing source : Construction details Plot area (sq. M.) Covered areas (sq. M) Built up area (sq. M.) Car parking area – open (sq. M)

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 10 Underground car parking area Floor Space Index Total Floor Space Index area Number of floors Guest rooms Total standard rooms No. Of standard rooms Area of standard room including vestibule (sq. Ft.) Area of toilet (sq. Feet) No. Of double bedded rooms No of twin bedded rooms No. Of executive suites Area of executive suite ( sq. Feet) Area of toilet (sq. Feet) Nos. Of presidential suites Area of presidential suite (sq. Feet) Area of toilet (sq. Feet) Width of the main corridor Public areas Lobby Area in sq. Feet Seating capacity (nos.) Area of lobby toilets ( gents and ladies) (sq. Feet) Shopping No. Of shops Total area in sq. Feet Business centre Area in sq. Feet Location Restaurant – All Day Dining Area (sq. Feet) No. Of covers Location Restaurant – Fine Dining Area ( sq. Feet) Location No. Of covers Bar Area ( sq. Feet) Location No. Of covers

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 11 Ball Rooms Nos. Of ball rooms Area of each hall ( sq. Feet) Location Meeting room Area ( sq. Feet) Location Banquet toilets – ladies Area ( sq. Feet) Banquet toilets – gents Area ( sq. Feet) Swimming pool Pool area (sq. Feet) Capacity of pool (ltrs.) Health club Area (sq. Feet) Location Service areas Kitchen – main Area (sq. Feet) Location Kitchen banquet Area ( sq. Feet) Location Laundry Location Area ( sq. Feet) Back office Area of front office behind reception (sq. Ft.) House keeping Total area in sq. Feet Engineering Area ( sq. Feet) Personnel & welfare Area of administration office ( sq. Feet) Area of staff lockers ( sq. Feet) Area of staff cafeteria (sq. Feet) Goods – handling Area of main store ( sq. Feet) Area of receiving (sq. Feet) Area of garbage rooms (sq. Feet) Executive office

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 12 Areas General manager office (sq. Feet) F & b manager office (sq. Feet) Sales office ( sq. Feet) Front office manager (sq. Feet) Others (sq. Feet) Fire & safety – installation Hydrant system Fire alarm and detection system Sprinkler system

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 13 Hotel Business Plan The primary purpose of a Business Plan is to create a written outline that evaluates all aspects of the economic viability of business venture including a description and analysis of business prospects. The purpose of business plan is to outline how you intend your business to succeed. This will involve looking in detail at the current business and market place and identifying how the business can be improved. A good business plan will evolve over time and needs to be reviewed on a regular basis. Business plan will become your roadmap to chart the course of your business. But at the outset you cannot predict all of changing conditions that will surface. So after you have opened for business, it is important that you periodically review and update you plan Why Prepare A Business Plan? Business plan is going to be useful in a number of ways: • First and foremost, it will define and focus your objective using appropriate information and analysis. • You can use it as a selling tool in dealing with important relationships including your lenders, investors and banks. • Your business plan can uncover omissions and/or weaknesses in your planning process. • You can use the plan to solicit opinions and advice from people, including those in your intended field of business, who will freely give you invaluable advice. What to Avoid in Your Business Plan Place some reasonable limits on long-term, future projections. (Long-term means over one year.) Better to stick with short-term objectives and modify the plan as your business progresses. Too often, long-range planning becomes meaningless because the reality of your business can be different from your initial concept.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 14 Avoid optimism. In fact, to offset optimism, be extremely conservative in predicting capital requirements, timelines, sales and profits. Few business plans correctly anticipate how much money and time will be required. Do not ignore spelling out what your strategies will be in the event of business adversities. Use simple language in explaining the issues. Make it easy to read and understand. Business Plan Format • A Vision Statement: This will be a concise outline of your business purpose and goals. • The People: By far, the most important ingredient for your success will be yourself. Focus on how your prior experiences will be applicable to your new business. Prepare a résumé of yourself and one for each person who will be involved with you in starting the business. This part of your Business Plan will be read very carefully by those with whom you will be having relationships, including lenders, investors and vendors. • Your Business Profile: Define and describe your intended business and exactly how you plan to go about it. Try to stay focused on the specialized market you intend to serve. • Economic Assessment: Provide a complete assessment of the economic environment in which your business will become a part. Explain how your business will be appropriate for the regulatory agencies and demographics with which you will be dealing. If appropriate, provide demographic studies and traffic flow data normally available from local planning departments. • Cash flow assessment: Include a one-year cash flow that will incorporate your capital requirements .Include your assessment of what could go wrong and how you would plan to handle problems. • Include your marketing plan and expansion plans.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 15 Hotel Name Hotel Address Owners Name Company Name Correspondence Address Business Plan

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 16 This is an overview of the business you wish to start and should be a summary of the key points of your entire plan. It is advisable to write this section once you have completed the business plan. The purpose of this summary is to explain the basics of the business in a way that both informs and interests the reader. Executive Summary

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 17 Management Team Mission Vision Objectives Nature of Business? Management

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 18 Local Marketplace Identify key competitors (Hotels/Resorts etc) Competitors Famous for? Key Offer Core customers Customer Analysis Describe the current and future customers Current Future Competitor Analysis

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 19 SWOT analysis This section will help you review the current position of the business and help identify opportunities STRENGTHS of the business – these must be both protected and promoted WEAKNESSES of the business – identify all business issues that need addressing OPPORTUNITIES – highlight the areas of greatest opportunity to help reduce weaknesses THREATS – must be removed if possible in order that your vision for growth can be achieved The Offer The Hotel and its Market

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 20 What will ensure that customers return to this Hotel? How will you differentiate from your competitors? How do you plan to develop the business? How will you manage to promote the hotel? The Offer

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 21 Please outline here how you currently see the Hotel being run, but more importantly how you intend to operate the Hotel in the future. Current Proposed Rooms Food & Beverage Entertainment Conferences Spa Other The Offer (continued)

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 22 Potential Customers Are there people in the area not catered for? Would they move from other hotel for a better offer? Target Customers Who are your target customers to help increase and maximize trade? Products & Pricing Please indicate below the current and proposed product range and prices Category Current Proposed Pricing Room Food Spa Conferences Weddings Beverage Other Sales & Marketing

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 23 Your projected profit & loss account will help you decide on your forecast turnover and forecast expenditure. This will in turn determine the potential profitability of your business plan and help you to decide whether you wish to proceed with your application. The cash flow forecast analyses the movement of cash in and out of the business over a 12 month period. Unlike the Profit and Loss forecast the cash flow includes Tax and therefore Tax payments. The forecast will also enable you to demonstrate seasonal trends that occur within the business 12 Months Profit and Loss Account Forecast First Year Cash flow

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 24 This section helps you to outline the overall cost of starting the business and how the business is to be funded. Start up costs Category Cost Total Where will the Capital for the Project come from? Funded From Cost Source Total Overall Costs

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 25 Notes

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 26 Hotel Feasibility Study Do you need to convince an investor or a partner to invest in your project? Do you have a very good idea or project that you're seeking to finance? Do you need to submit details of a project to your board of directors, external agencies or organizations and you're not sure of the best way of presenting it? Do you really need to convince someone, to join you or support you in a project or venture? Do you have several alternative projects and/or: 1.You are undecided on which alternative to opt for and you need to make sure you're making the right decision. 2. You need a sound way of weighting the various alternatives. 3. The choice between various alternatives is unclear or complicated. Do you need to research and analyze the business opportunity, however big or small? “Then you need Feasibility Study” Conducting a feasibility study for a new venture requires a thorough analysis of market conditions. Market conditions in your area have a significant impact on the profitability of your hotel or motel. The strength of the local lodging market affects how many rooms you can sell and the rates that you can charge. It will help you analyze your market so that you can gauge the potential of your operation and make more informed operating and investment decisions. A feasibility study is designed to provide an overview of the primary issues related to a business idea. The purpose is to identify any “make or break” issues that would prevent the business idea from being successful in the marketplace. In other words, a feasibility study determines whether the business idea is viable. This knowledge is crucial for any potential hospitality business.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 27 A thorough feasibility study provides much of the information necessary for a business plan. It is therefore appropriate to complete a feasibility study prior to carrying out a business plan. For example, a good market analysis is necessary in order to determine the hotel’s feasibility. This information can then provide the basis for the market section of the business plan. Objectives of Feasibility Study 1. Evaluate the market potential for the proposed hotel based on an analysis of the market support for a hotel facility on the subject site. 2. Comment on the appropriate numbers types, guest room sizes and other amenities which would best serve the needs of the market. 3. Project levels of market penetration, occupancy, and average room rate for the proposed hotel for the first five years of operations. 4. Prepare detailed projections of Cash Flow from operations before fixed charges for the hotel for the first five years of operations. 5. Provide a written report containing the conclusions of the Feasibility Study and present Financial Projections for the proposed hotel. Feasibility Study will help you answer questions such as: What trends are occurring in the lodging industry? Are local economic and visitation trends favorable? Who are my competitors and how successful are they? What are the potential lodging market segments in the area? What occupancy and average room rate could I achieve?

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 28 Feasibility Study for Hotel Financing Financing for any startup hospitality business is hard for obvious reasons. A lender is gambling. It is betting that the owner of the startup business is going to be able to meet projections and pay back the loan. A startup Hotel offers an additional challenge – most new owners lack management experience in the lodging or some comparable industry. When a lender finances a startup, what it is really betting on is the management – the owner. Normally, a lender would never provide a startup loan for someone without significant experience in the business he or she is starting. If you are seeking to finance a new hotel you would be required by your lender to do a feasibility study. Doing a feasibility study for your Hotel will give you a chance to prove your case that there is a demand for your rooms at a price that will generate a profit. A lender will almost always require a large cash injection – usually a minimum of 30% of the total project cost. You will also need a certain amount of working capital to carry you through the startup period. Steps in Feasibility Study Feasibility Study includes a variety of work steps which enables to evaluate historic trends and project the future competitive supply of and demand for hotel accommodation in the area. The scope of the work includes, but is not necessarily limited to the following: Step 1. An inspection of the site and surrounding area to determine their suitability for the proposed hotel, taking into consideration such factors as accessibility, visibility, and proximity to demand generators. Site and Area Evaluation: • The Site • Motorways & trunk roads • Country map

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 29 • County Map • City/town Map • Site pictures • Traffic volume • Signage, Accessibility, and Visibility • Proximity to Demand Generators • Utilities Step 2. An inspection and analysis of the hotels in market area that would provide the primary competition to the proposed hotel. Census of the competitive facilities included both existing hotels as well as those under construction, planned, or rumored. Supply and Demand Analysis: • Competitive Market Set • Pictures of Competitive Hotels • Research area occupancy • Research area Average Daily Rate • Research area trend • Full service, limited service or extended stay survey • Commercial Guest Demand • Leisure Demand Step 3. An analysis and economic evaluation of the market area based on interviews with local area businesses and local government officials, local government websites, compilation of pertinent market data, and a review of those economic indicators which would be most relevant to the success of the proposed project. Market Area Analysis: • Community Profile • Business Climate • Area Businesses • Office/Industrial space occupied • Transportation • Education • Health Care • Quality of Life • Neighboring Markets • Calendar of Events • Attractions • Recreation

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 30 Step 4. Determine the current overall market demand and rooms in the subject area and the share of market demand that is generated by tourists, commercial travelers, and group meeting delegates. Projected Usage of Proposed Hotel: • Projected Market Penetration and Occupancy • Competitive Set Average Room Rate • Projected Average Room Rate Step 5. A projection of growth rates for the various market segments based on the factors that should impact the future demand for hotel rooms. Step 6. An evaluation of the projected hotel supply and demand relationship in the market area to reach conclusions regarding the market support for the proposed hotel. Step 7. Comment on the proposed facilities in terms of number, mix, and type of guest rooms, and leisure amenities. Proposed Facilities and Services: • General Concept • Room Mix • Food and Beverage Facilities • Meeting Facilities Step 8. Comment on the proposed facilities in terms of style and size in relation to proposed standard of hotel Step 9. Projections of occupancy and average room rate for the proposed hotel, including projected market mix of guests. Step 10. Cash flow projections for operations before fixed charges for the first five years of operations. Financial Projections Year One to Five: • Minor Revenue Departments • Payroll • Rooms Department • Administrative and General • Food & Beverage

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 31 • Sales and Marketing • Franchise Fees, if required • Utilities • Repairs and Maintenance Step 11. Add in conclusions, which would comment on the following: Market Area Analysis Site and Area Evaluation Supply and Demand Analysis Proposed Facilities and Services Projected Utilization of the Proposed Hotel Financial Analysis Franchise Information, if required. Below is a Sample Feasibility Report:

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 32

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 33 Hotel Financial Projections Financial projections for a proposed new hotel will normally comprise estimated statements of profit and loss and of cash flow, based on which an investment analysis is prepared. It covers the number of rooms sold by the hotel, the number of covers served in the restaurant, the utilization of the hotel’s business centre, the number of members in the leisure club, and so on. For a hotel, the selling of bedrooms is normally where the majority of the profit is generated and so the appraisal will start with an analysis of how many room nights can be sold. This is a fundamental point relating to the projections contained within a feasibility study – they are based on the assumptions and information available to the consultant at the time of their preparation. Unforeseen events can and will affect the eventual outcome, and this is where the risk inherent in any capital investment lies. Below is a format for Hotel Financial Projections:

Step By Step Guide To Build A Hotel Hotel Financial Projections ( 5 Years) 1 2 3 4 5 RevenuesNumber of rooms number clients/room occupancy rate per year Room daily room rate per client( fixed) daily room rate per client if # from fixed per year daily average room revenue per year total room revenues per year F&B F&B/client/day ttlF&B

Step By Step Guide To Build A Hotel 34 total F&B per year Telephone Telephone/client/day total telephone per year Laundry Laundry/client/day total laundry per year Recreation recreation/client/day total Recreation per year Other income other income/client/day total other income per year Total revenues per year inflation on revenues per year

Step By Step Guide To Build A Hotel cumulated inflation per year Total revenues with inflation per year Costs Departmental expenses Room (staff expenses) minimum staff/room staff/client total staff number per year average salary/year total staff salaries/year per year F&B F&B/client/day Total F&B per year Telephone

Step By Step Guide To Build A Hotel 35 Telephone Telephone/client/day total telephone per year Laundry cost/client total cost per year Recreation recreation/client/day total Recreation per year Other income other income/client/day total other income per year Total departmental expenses per year Operating expenses

Step By Step Guide To Build A Hotel Administrative & general minimum staff/room average salary/year total staff number per year total/year Management fees % turn over total management fees per year inflation on cost not applicable Property operation &maintenance % investment/year maintained % investment/year total maintenance/year per year Marketing % turn over ttlkti

Step By Step Guide To Build A Hotel 36 total marketing expenses per year inflation on cost not applicable power min power/room/day (kW) power/client/day (kW) total power/year(kW) per year unit cost(LE/kW) total cost of power per year water consumables min water/room/day(M3) water/client/day(M3) total water/year(M3) per year unit cost(LE/M3) total cost of water per year waste cost of waste/room/day

Step By Step Guide To Build A Hotel total cost of waste per year miscellaneous= % turn over inflation on cost not applicable Total operating expenses per year Fixed expenses (out of amortization/depreciation) Insurance %investment insured % total insurance/year per year Incentive fees % turn over total management fees per year inflation on cost not applicable Total fixed expenses(out of amortization/depreciation) total departmental+operating+fixed costs per year

Step By Step Guide To Build A Hotel 37 inflation on costs applicable per year cumulated inflation per year Total departmental+operating+fixed costs with inflation per year Depreciation/Amortization structure & civil works % /year per year electromechanical % / year per year FF&E %/year per year preopening %/year per year total depreciation/amortization/year per year

Step By Step Guide To Build A Hotel Debt service 1 loan1 % debt total loan grace period (year) <3 years loan duration (year) <10 years loan rate loan yearly installment per year 2 loan2 % debt total loan grace period (year) <3 years loan duration (year) <10 years loan rate loan yearly installment per year 3 loan3 % debt total loan

Step By Step Guide To Build A Hotel 38 grace period (year) <3 years loan duration (year) <10 years loan rate loan yearly installment per year total loan yearly installments per year Total costs & expenses&debt service out of amortization/depreciation per year Total costs & expenses&debt service (includ. Amortization/depreciation) per year Cash before taxes Net profit before taxes Taxes % on profit Total taxes total per year

Step By Step Guide To Build A Hotel Net profit after taxes PROFITABILITY -3 -2 -1 0 1 Dividends Dividend policy % profit served per year profit served per year % reserve per year reserve per year reserve released per year cumulated reserve per year dividend/year per year -3 -2 -1 0 1 Final value after 10 years

Step By Step Guide To Build A Hotel 39 ydepreciation value after depreciation ("book value") rate of capitalization of year 10 capitalized dividends of year 10 estimation of reinvestments(refurbishing) at year 10 capital due to reimburse after 10 years final value -3 -2 -1 0 1 Profitability total equity(including loan reimbursements before transfer to Owner) Internal rate of return on equity total invest (including loan reimbursements before transfer to Owner) Internal rate of return on project

Step By Step Guide To Build A Hotel SIMPLIFIED CALCULATION Internal rate of return on equity (simplified) Internal rate of return on project (simplified)

Step By Step Guide To Build A Hotel 40

Site Selection and Land Acquisition The following are some of the many things to be kept in mind, while selecting a site before acquiring land for Hotel Construction: Zoning Restrictions: City zoning ordinances must allow your specific type of operation to do business at this location and must also permit adequate parking on or near the property. Elevation: Elevation affects gravity, and gravity affects drainage away from the building. A good site is environmentally friendly. It will minimize your sewage backup, plumbing, and grease interceptor problems. It does not require extraordinary modifications to get good water pressure throughout the building. Also, find out if the site is located in the floodplain of an adjacent river or creek, which may make insurance difficult or expensive to obtain. Utility Requirements: Amazingly, some people put down earnest money on a piece of property, only to find out that gas lines or sewer lines are not available there or are inadequate for commercial use. Your real estate agent or local utility companies can check this for you. Electrical power requirements are complex for Hotels and may mean you need more power than now exists in the space. Location: There are some immediate concerns when locating in a downtown area as opposed to a roomier suburb. Specific environmental restrictions may have been enacted for good reasons, but they may also make it impossible for you to do business in certain locations without extensive capital outlay and/or building modifications. Precipitators, pricey equipment to clean exhaust fumes before expelling them into the atmosphere, may be required, and exhaust vents can’t simply be punched through a wall—as mentioned, they may have to snake up several floors to the roof of the building. Sewer and grease trap requirements are often more complicated. Licensing can be more expensive, and regulations stricter overall, in an urban area. Logistics also figure prominently in busy or congested locations. Where will trucks park to make their deliveries? How difficult will trash removal be? Traffic: The roadway in front of your proposed site provides an important clue to its future success. Do cars whip by so quickly that the motorists never see your place? Drivers traveling at 35 miles an hour or less will be best able to read your signage and to turn spontaneously into your parking lot without causing a traffic mishap.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 42 Is the nearest intersection so busy that most people would think twice before trying to cross the street to patronize your business? Does the outside traffic hinder or help you? Stand outside the location and watch both automotive and foot traffic in the area. Ask yourself if anyone, coming from any direction, would be frustrated by the sheer hassle of getting to your site. Visibility: If people cannot find you because they cannot see you, you’re almost always in trouble. Exceptions exist, but they are rare. If possible, your building should be visible from both sides of the street, as far away as 400 feet. This also means checking local signage laws. Cities, counties, and even your neighborhood merchants’ group may have restrictions on the types, sizes, height, and even brightness of outdoor signs. Parking: In various locations, local ordinances specify the ratio of parking spaces to the size of the building. Closely examine parking availability during peak hours. Will your guests pay the added cost for convenience or security? Or will you offer complimentary parking and foot the bill yourself? Finally, where will your employees park? Accessibility: Make it easy for guests to enter and leave your parking lot and your building. Check the locations of traffic lights or stop signs, which may affect foot traffic. One-way streets or speed limits of more than 40 miles an hour may make your place a little tougher for cars to get to. Your city planning and zoning department will be able to provide any recent surveys of vehicle or foot traffic as well as details of future plans for the street. A prolonged construction project that restricts access could be deadly to business. Accessibility also includes compliance with Disabilities Act, Businesses are required by law to provide reasonable amenities—such as handicapped parking spaces, wheelchair ramps, and accessible restrooms—that enable physically challenged persons to be customers too.

Step By Step Guide To Build A Hotel Step By Step Guide To Build A Hotel 43 Buying or Leasing Land Once you have identified a location where your concept will fit, where members of your target market will visit on a regular basis, your work has just begun. Will you lease the site or purchase it? You may consider hiring a commercial real estate broker to assist in your property Search, but it is smart to do concept and target customer research before you do so. Things to keep in mind before buying land: Check the title before buying When buying a property it is important to check for any restrictions that apply to the property that might prevent you from enjoying the use of the land, such as covenants and easements. The Certificate of Title is the official record of who owns or has an interest in a property and will inform you of such restrictions. While we recommend that you consult a lawyer before putting in an offer to buy a property, there are some simple ways that you can easily check the Title that will help you determine if there are any issues that you should be aware of before you even commit to making an offer. Checking information contained on the Title The Certificate of Title includes the following key information: • Legal details – including estate type, title, and legal description • Current legal owners • Interests – including ownership transfers, mortgages, and easements such as right-of-ways • Diagram of the plan of the property (depending on the Title type you get) This information will help you identify potential issues that you should be aware of including if there are any covenants or easements, verifying the legal boundaries of the property, and checking that the people selling the property are the official owners. If there are any interests in the property other than transfer or mortgages then you should pay very close attention to these and they should be thoroughly checked. Such interests include covenants and easements that may restrict what you can do on the land. Covenants are often put on properties, especially in new subdivisions to ensure that any structures built on the land are in line with the quality of the