Chapter "Resort spas: How are they massaging hotel revenues?" The purpose of this paper is to illustrate financial benefits of spa operations in resorts by developing a spa revenue contribution technique/method. | The Hotel Development Process John Dew Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved The Development Company The developer is the entrepreneur, the risk taker, who originates the idea for the hotel. The Developer often puts their 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. The higher the cost of land, the more the hotel will need to charge in their rates. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved The Feasibility Study When the developer selects a site, a feasibility study is often commissioned to obtain an analysis of the site by an objective third party. Generally, a feasibility study will consider, evaluate, and make recommendations about the project based on the following variables: The site The economy of the area The hotel market Identification of which hotel market segment to serve Selection of appropriate hotel design Selection of appropriate hotel brand Ten-year projection Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved Creation of the Ownership Entity An ownership entity needs to be created to hold title to the land and the hotel once it’s built. A business structure is selected, normally in one of the following forms: Limited liability company (LLC). Limited partnership (LP). S corporation C corporation. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved The Development Agreement The newly formed entity now enters into a development contract with the development company to take the project to completion. The agreement will generally cover such variables as: Selection of architect/engineers. Selection and supervision of a general contractor. Processing all building and occupancy permits. Raising all the equity money from investors. Securing a construction mortgage loan. Liability for cost overruns. Copyright © 2011 by John Wiley & Sons, . | The Hotel Development Process John Dew Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved The Development Company The developer is the entrepreneur, the risk taker, who originates the idea for the hotel. The Developer often puts their 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. The higher the cost of land, the more the hotel will need to charge in their rates. Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved The Feasibility Study When the developer selects a site, a feasibility study is often commissioned to obtain an analysis of the site by an objective third party. Generally, a feasibility study will consider, evaluate, and make recommendations about the project based on the following variables: The site The economy of the area The hotel market Identification of which hotel market segment to serve Selection
