10 Ways to Make Your Hotel Attractive to Investors

By Roger G. Hill Chief Executive Officer & Chairman, The Gettys Group Inc. | October 28, 2008

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 Replace outdated features: Many investors shy away from properties that will require extensive renovation, so you may need to upgrade aspects of your hotel to elevate its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.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.