Starting a new hotel project can be an exciting process. Finding the right piece of land can be essential in opening a successful hotel that helps you meet your profitability goals.
While looking for the right location, it is important to consider the type of hotel you want to build. If there is not enough demand in the area to support that type of hotel, it will most likely result in an underperforming hotel. To avoid this, it is recommended that you research the demand generators in the area and explore useful reports like the STR report. By studying the ADR, RevPAR and number of sold out night trends you may be able to determine if the location can support a new hotel.
If it looks like the market can support a new hotel, it is important to consider the physical attributes of the location. Consider things like access to the property and nearby nuisances that could influence the guest experience when open. If the price is right but the land is near a building with excessive noise pollution it might be best to try and find another site. Location is one thing you cannot change about your hotel so finding the right location is crucial.
Another consideration is the size of the property. Most hotels will do better on a property that is at least 2 acres, while some hotels can work on as little as 1.5 acres. When you think you have found the right location, it is important you do your due diligence prior to purchasing the property. It is recommended that you meet with the city or local regulators to confirm the zoning allows for a hotel. While meeting with regulators, inquire if there are any land development fees or improvement requirements. You should research what utilities are in the area and what the associated hook up costs will be. These extra steps can prevent unexpected expenditures.
With a little effort you can find the perfect piece of land for your hotel. If you are looking to build a franchised hotel, it is important to inquire what the franchisor can do to assist you along the way. Some franchisors have land experts to assist you in the search. Some brands may even own land in key markets ready for a developer to purchase.
