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Hotel Development Checklist
Site Selection Criteria
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Is the location near hotel room demand generators?
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What are the hotel room demand generators? Tourist Attractions, Industrial
Park, College, Hospital, Major Crossroad for Through Traffic, etc. Have
these demand generators expressed the need for hotel rooms? How many would
they use a month?
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Is location zoned for a hotel or can zoning be easily changed to allow a
hotel?
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Do you have enough land? ( 80 Rooms - 1.7 acres
~ 140 Rooms - 2.5 acres )
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Are utilities available at the site? Sewer, water, electric? Gas
(optional)?
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Would the current land owner be willing to exchange the land for a
percentage ownership in the hotel?
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Is the location close to restaurants? What restaurants and what is the
distance?
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How many hotel rooms currently exist in your community? Are the existing
hotels successful? Are they chain affiliated or "mom and pop"
businesses?
Cost of
Hotel Development
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Approximate turnkey development cost is $75,000 per room
to $110,000.00 per room (includes land).
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25% equity is required. Do you know an individual or group willing to fund
the equity for ownership in the project? ( 80 Rooms - $1,500,000.00 ~ 140 Rooms -
$3,850,000.00 )
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Is a local bank or other lender available to fund the debt on the hotel?
80
Rooms - $4,500,000.00 million ~ 140 Rooms - $11,550,000.00
Hotel Management
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Unlike other commercial real estate deals, a hotel is an operating business.
The financial success of the operation determines the market value of the real
estate. To maintain or increase the value of the real estate, experienced
hotel management must be in place.
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Does the investor have hotel operations experience or does he need to hire a
manager or management company?
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Is the investor willing to be a 49% owner of the project if H&W
guaranteed the debt and managed the hotel for a fee? The investor would
receive a preferred return until he received his initial equity, then returns
would be prorated by percentage of ownership.
►UPDATED
MAY 31, 2008◄
H&W Management Co., Inc.
1021 MAJESTIC DR., SUITE 380, Lexington,
KY 40513
(859) 263-0106
This page and its contents © 2004 H&W, except as otherwise noted.
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