1. Total project cost: Redactors of Hotel Management assume to keep the leverage at no greater than 60-percent loan to value for several reasons. Firstly, lenders tend to get a bit skittish as you get north of 60-percent to 65-percent LTV and start pushing up their interest-rate quotes. Secondly, it’s simply more conservative to keep debt moderate, putting less pressure on business cash flow.
2. PIP Condition: It was decided that the energy, planning, execution, risk and financing of a significant modernization was a less attractive option than targeting a hotel that didn’t require a big property improvement plan as long as the modernized hotel was achieved with good-quality furniture, fixtures and equipment.
3. Building construction and height: Many recently built hotels are wood-frame construction; this construction type is often of lesser quality and durability than concrete and steel or cinder-block buildings. Secondly, virtually all major brands are moving away from two-story buildings for their better brands. Those hotels are at risk of being downgraded in the future, adversely affecting their long-term value.
4. Branding: While a franchisee’s focus usually is, “Will our hotel be reaffiliated and at what cost?,” there often is less focus on the culture of the branding company. By this, It means analyzing the general history of the branding company when it comes to initiating or ending brand affiliation, stuffing multiple sister-brands into the market, requiring capital-expenditure renovation, offered services, and the all-in cost/benefit evaluation. How deeply do you trust in the culture?
5. The search: It is strongly recommended to stay in ongoing contact with numerous hotel brokers, establishing good relationships with individual agents at these firms, constantly checking their listings online, and treating the brokers and their listings with the respect they clearly deserve. #hotelierlife #hotel #investment #business #hospitality
#hotelierlife #business #hospitality #investment #hotel