150 likes | 734 Views
Forces Shaping the Hotel Business. Chapter Eleven. Sections in a Typical Feasibility Study. Market area characteristics Site/area evaluation Competition analysis Demand analysis Proposed facilities / services Financial estimates. Hotel Financing. Hard costs Soft costs
E N D
Forces Shaping the Hotel Business Chapter Eleven
Sections in a Typical Feasibility Study • Market area characteristics • Site/area evaluation • Competition analysis • Demand analysis • Proposed facilities / services • Financial estimates
Hotel Financing • Hard costs • Soft costs • Permanent financing loans (take-out) • Construction financing loans
Debt Financing Debt Financing from Banks, Insurance Companies, and Conduit Lenders • Mortgages • Bonds • Debentures • Commercial mortgage-backed securities • Mezzanine/gap financing
Equity Financing • Real estate investment trusts (REITs) • Initial public offerings (IPOs) • Secondary stock offerings
Financial Factors Influencing Hotel Investment • Interest rates • Inflation • Leverage • Taxes • Exchange rates
Six Forms of Hotel Ownership / Operation • Independently owned and operated • Independently owned, leased to an operator • Owned by an entity or group, operated by a hotel management company • Owned and operated by a chain • Owned by an independent investor or group, operated by a chain • Owned by an individual or group, operated as a franchise of a chain
Two Kinds of Management Companies Chain organizations • Serve as management companies for hotels under their franchises Independent management companies • Able to offer more control over daily operations to owners of smaller properties and more flexibility in contract terms
Measuring Rooms Division Performance • Average Daily Rate (ADR) • ADR = Rooms Revenue ÷ Rooms Occupied • Occupancy Percentage (OP) • OP = Rooms Occupied÷Rooms Available x100 • Revenue Per Available Room (REVPAR) • REVPAR = OP x ADR