Expert Advice on Hospitality and Leisure
We provide development strategy recommendations and master plan reviews for a wide range of hospitality and mixed-use real estate projects, typically advising on development mix, market positioning, and target markets. As such we ensure that the concept is aligned with the future market situation while maximising the owner’s returns.
Based on the project’s location and our market research, we recommend on an optimum investment strategy including development mix and area program, phasing strategy and recommended revenue models for the different real estate components. For hospitality real estate developments, Knight Frank advises on the optimum mix in terms of number of keys by room type, room sizes, facilities and amenities. If required, we can test a number of scenarios for the project including, but not limited to the following concepts:
♦ Branded residences
♦ Sale & leaseback
♦ Fractional ownership
The market and financial feasibility study based on the co-developed concept between the client and Knight Frank provides an independent and bankable document for the purpose of raising finance. This report comes with a return analysis per component including IRR, NPV, payback period and ROI. In addition, we run break-even and sensitivity analyses on key variables such as development cost, occupancy and average daily rates (ADR).
With the main focus being on primary research, Knight Frank undertakes in-depth interviews with key industry experts to gain market intelligence relevant to the project. Interviews are commissioned with the likes of hotel general managers, airport representatives, developers of competing properties, cost consultants, municipal planners and tourism authorities.
Virtually all hotel management and franchise agreements are drafted by operators. Contracts are rarely transparent and as such do not tend to benefit the project owner or investor. At Knight Frank, our professionals will assist in mitigating any potential pitfalls whilst aiming for fair reciprocity, resulting in a higher capital value for your property.
Knight Frank provides professional RICS Red Book compliant valuations for all purposes and for all types of hospitality assets. Understanding a hotel’s existing and potential performance, plus asset value is crucial for developers, owners and investors alike to allow informed decision making throughout the lifecycle of any hospitality asset.
The main objective for the hotel asset manager is to aid hotel owners to realise the full potential of their investments through a continuous process of value creation and enhancement. This is achieved through optimising the hotel’s operational, financial and capital efficiencies to maximise profits and investment returns, benefiting both owner and operator.
Knight Frank’s asset management services are modular and can be commissioned separately. Multiple services may run concurrently if Knight Frank acts as Asset Manager on an ongoing long-term basis.
♦ Operational and financial review
♦ Strategic planning and development of annual business plans
♦ Loan performance monitoring and compliance
♦ Capital program planning and analysis
♦ Sales / disposition and hotel refinancing (ad hoc services)
♦ Due diligence (acquisitions) / operator selection (ad hoc services)
Third-party managed hotels are at risk of under performance - the expertise of an asset manager is brought in to maximise the potential for the owner.
Potential dilemmas without hotel asset management:
♦ Operators focus their best resources for their own hotels or those that offer better terms
♦ Reduced transparency in monitoring revenue, cost, and operations management
♦ Poor maintenance and FF&E spend resulting in higher renovation costs
♦ Enhanced brand value at the expense of owner ROI
♦ Management does not provide key information
♦ Hotel is used as a “training hotel” for operator
♦ Hidden charges (in operations costs)
♦ Overspending on refurbishments