Selecting a New Market for Acquisitions or New Builds
By Mark Ricketts President & Chief Operating Officer, McNeill Hotel Company | August 25, 2019
A robust era for the hospitality industry has made this an exciting time for property acquisitions and new builds for a wide range of investors and related entities, including property and asset managers and site selection, land acquisition and construction specialists.
While the nation's top MSAs remain popular, many hospitality investors are looking closely at smaller markets that demonstrate newfound appeal. At the same time, in a stronger economy, we may possess the development enthusiasm and investment wherewithal to re-assess and find excellent potential in previously overlooked markets now ripe for renewal, from older ring suburbs to historic downtowns.
In making these decisions, on the market specific side, hotel entities will look at such factors as access to capital; the overall appeal and demographics of a community; existing distribution of product types and major brands; key existing and prospective demand drivers; recent and prospective market performance; barriers to entry and any special factors particular to that market.
Moreover, the hospitality entity must balance these factors with its overall growth strategy; traditional market preferences and familiarity with these markets; geographic spread; executive suite capabilities and related organizational resources; and the ability to service that property from headquarters. Being able to fill all expected staff positions at a new property, whether through retained personnel or transfers and new hires, is also a key consideration.
This article will discuss this delicate balancing act, especially in the context of organizational growth and trends that are driving the hospitality industry at the present time. The discussion can apply to ownership groups, those investing in hotels while "leaving the driving" to others; property and asset managers; and real estate developers.
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