Mr. Hill

Architecture & Design

10 Ways to Make Your Hotel Attractive to Investors

By Roger G. Hill , Chief Executive Officer & Chairman, The Gettys Group Inc.

From a financial perspective, the lodging sector in the United States is healthy, according to PKF Hospitality Research. The current market and industry conditions dictate some tightening in the lending community, however, and there's certainly no lack of competition for funding. Capital just isn't as abundant as it's been for the past few years, and you'll need a more aggressive and comprehensive method to attract these investors.

Following are 10 powerhouse steps to attract investors to your property. I encourage you to evaluate every aspect of your hotel, including its overall appearance, functionality, operations, and profitability. Readying your property for new opportunities is a lot of work, but once you have investors lined up, it'll be worth all the effort.

1. Look at your property with fresh eyes: Before you do anything else, take a step back from your day-to-day dealings and observe your property from an outside point of view. Consider what an investor, who doesn't know the ins-and-outs of your hotel, would see. Are services and amenities up to par and representative of today's trends? Do you deliver on promises to your guests? Is the design of your hotel reflecting the audience you need to attract? Is it time to change the awkward layout of your guest rooms or public circulation spaces? Be critical and ruthless in your analysis, but also take note of your favorite areas in the property. Is your check-in inviting and perfectly executed? Do your guest rooms boast state-of-the-art amenities that your competition lacks? This is the time to assess the strengths and weaknesses of your hotel and commit to making changes that deliver maximum ROI.

2. Play up unique features: The second step is fun - celebrate your hotel's finest points. You know what sets your hotel apart from the competition, but you need to highlight these areas so investors see them as well. Circle back to the first exercise. Does your hotel embrace local character or a unique architectural history? Do your rooms combine luxury with state-of-the-art technology to appeal to the business as well as leisure traveler? Such signature elements are the key differentiators of your property - make sure they stand out.

3. Replace outdated features: Many investors shy away from properties that will require extensive renovation, so you may need to upgrade aspects of your hotel to elevate its appeal or market relevance. Focus on design elements that are immediately visible and directly affect your guests' stay - and investors' impression of the hotel. Devoting resources to design improvements can generate significant return on a sale and positively impact long-term financial projections for a future owner.

4. Add amenities, if any are lacking: Potential investors are savvy and pay attention to trends and the demands of tomorrow's guests. Technology, sustainability practices, health and wellness, and social gathering places are all top drivers for differentiation. Creating a distinctive experience is increasingly important for guests, and potential buyers will take note of properties that are doing this well and staying ahead of the curve.

5. Make sure your space programming is efficient: Fundamental design elements like circulation and planning play a large role in guests' experiences. If your hotel is a family destination, then examine how much space the closet holds for a family of four, or whether it's too crowded to comfortably add a pullout bed to the room. Pay special attention to your lobby and public gathering spaces. As guests and investors walk in the door, make sure their first impression is not a disjointed, underutilized space.

6. Evaluate the ratio of front- to back-of-the-house spaces: A balanced approach to these spaces is a clear indicator that you efficiently manage your property. Hotels that create a fluid and pleasing guest experience throughout while ensuring efficient and optimized storage, operational and food and beverage support behind the scenes are more successful and attractive to hoteliers. Focus on how your operational spaces affect your hotel procedures and front of house appearance.

7. Inspect operations from top to bottom: If your hotel is not run effectively and efficiently, investors will see it in the REVPAR and ADR figures, and question the property's future earning potential. Demonstrating that your hotel is well-managed is a critical selling point. At the end of the day, investors put their money into well-run ships. If any areas are lagging, straighten them out before you get too far into the process.

8. Emphasize current revenue streams and suggest new ones: This is one of the most important steps. Even if you don't take any of the previous steps, don't skip this one. Exercise your creativity and imagine how you can add revenue-generating opportunities and spaces to your hotel. These elements are key to catching the attention of investors and critical components to sealing a deal. If you can show investors the opportunity for increasing profits, they are more likely to see your property as a sound, long-term investment.

9. Make sure you're appealing to the correct investor: You're nearly ready to start your outreach, but you need to call the right people. When you're working to secure investors for your property, make sure you're appealing to people who are interested in the signature aspects of your hotel. Niche markets are exploding, with investors focusing on sustainability or urban locations, for example. These decisions are less about finding the money and more about finding the deal that makes sense for your hotel and your investors' long-term growth plans.

10. Create an experience for the investor: Now that you've evaluated and upgraded your hotel, it's time to put on a good show. Emphasize what the hotel offers guests and why it is unique; highlight your hotel's personality. Make your hotel, regardless of size, exude the feel of a boutique property. Catch investors' attention and show them everything you can offer.

Putting in the time and resources outlined in this 10-step approach is worth it. When investors are evaluating your property, they scrutinize everything from the financial performance of your hotel to the aesthetic appeal it holds for guests. Preparation is a large component in making the sale, and accentuating the key differentiators of your property is essential for success. Any adjustments you make not only increase your exposure as a potential high-quality investment, but contribute to the flow of guests through the front door now and in the future. Regardless of size, brand, or location, any hotel can potentially fit the needs of the right investor with careful, strategic, and creative positioning.

Nearly 25 years ago, Roger Hill co-founded Gettys, a Top 10 hospitality interior design, procurement and development firm. Under his leadership, Gettys has grown to a global team of business-minded professionals who specialize in hotels, resorts, spas, casinos and mixed-used developments the world over. A respected industry veteran, he is frequently called upon by hospitality and business media outlets to provide insight into the redevelopment, renovation, and repositioning of hotels. A graduate of Cornell University, Roger has served as an appointed delegate for the White House Conference on Small Business, and is a member of ULI, YPO and ISHC. Mr. Hill can be contacted at 312-836-1111 or info@gettys.com Extended Bio...

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