Throughout the region, cost overruns in the hotel development phase are prevalent, which is why top hotel management companies are working to manage these. However, a review of cost data from numerous hotels developed in nation throughout the years demonstrates a degree of consistency in hotel building prices for identical hotel goods. Instead of cost overruns, this indicates a lack of budgeting at the original concept and design stages of hotel projects, as well as overly optimistic cost predictions and overdesigned hotels.
Under budgeting results in a lower return on capital than expected and makes debt servicing more inconvenient. It also leads to delays in construction projects and poor quality, all of which contribute to greater Costs and, finally, a Non-Performing Asset or financial crisis. Indeed, because of the existing practice of commencing construction before the design of the project, ‘cost overruns are only discovered late in the hotel building process when the majority of the expenses have already been factored into the areas completed. Typically, this late ‘wake-up call’ results in:
- Interior space renovations in a hurry
- Work award delays
- Due to a lack of blueprints, contractors are unable to work.
- Materials purchased that aren’t up to snuff
- Work is being assigned to unqualified vendors at unsustainable rates.
Sustainable Hotel Development
It’s challenging enough to plan and build the perfect hotel for a green-field project, but it’s even more difficult for a brown-field or conversion project. Estimating the cost of finishing a partially constructed hotel or the cost of key duties with a running property’s Property Improvement Plan (PIP) necessitates extensive technical due diligence. The new owner’s commercial aims must be balanced against the building’s technological restrictions.
Hotel development is a complicated process that needs strong experience, particularly in the early phases of planning and construction, when a lack of such expertise would almost certainly result in cost overruns and, eventually, poor financial returns on the project. With this in mind, hotels have combined their respective business and technological experience to provide advice to potential hotel owners throughout the vital early months of development, with four main goals:
- To check the technical viability of the hotel programs envisioned in the marketing feasibility report and to ensure that its cost satisfies the business plan’s ROI targets.
- To assemble the best team of experts for the hotel’s growth.
- To lead the conceptual design process in order to create a hotel that not only achieves all of the business plan’s cost and revenue-generating targets but also surpasses its rivals by providing a superior guest experience.
- To create a Project Execution Plan that will serve as a foundation for cost, timeliness, and quality.
In A Nutshell
The timely and cost-effective completion of hotel projects is dependent on the use of sustainable development project services. We develop strong connections with all project stakeholders to harness their knowledge and produce unique solutions that add value to the project and our client’s company, in addition to comprehensive planning and proactive management of risks and opportunities.
Working with a leading hotel development company in Atlanta, GA will help you to get started with your project already.