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Investment in luxury hotel projects
EIAT Conference Belgrade
September 21-23, 2012
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What is a luxury hotel?
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June 2009
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Prime location
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Unique experience
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Personalized service
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Attention to detail
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Spacious rooms
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Luxurious bathrooms
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Prime food and beverage selection
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Branded amenities
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Exquisite spas
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Exotic interiors
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Stylish
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Unique settings
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How much does it cost to build?
Comparison:
Budget hotel from USD 60,000 per key 3* hotel from USD 100,000 per key 4* hotel from USD 250,000 per key 5* hotel from USD 450,000 per
key
Prices exclude land cost
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Luxury hotel construction cost?
Over $ 600,000 / key
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Luxury resorts over $ 1 million per key
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Historical buildings over $ 1.5 million / key
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The Atlantis Dubai over $ 1 billion
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Emirates Palace – over $ 2 billion
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Designer Hotels
Ian Shrager Armani Hotels Missoni Hotels (Rezidor group) Bulgari (Marriott group)
Construction costs usually over $ 1 million / key
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Designer Hotel – Ian Shrager
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Designer Hotel - Ian Shrager
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Designer Hotel – Ian Shrager
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Designer Hotel - Armani
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Designer Hotel - Bulgari
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Designer Hotel - Missoni
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Investment costs
Purchase of land Obtaining all necessary permits Consultancy costs / feasibility study Architectural / design costs Construction costs + FF&E Technical services fee / supervision Pre-opening office expenses Management fees Working capital
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Why invest in luxury hotels
Prestige / Trophy asset ROI - good returns Investments in real estate / diversification Tax benefits International exposure
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Key questions
Current supply? Where should it be located? Who should it cater for? Is there adequate demand? Which brand? Investment value? Return on investment? Mode of financing?
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The Brand is the key
Which brand to choose?
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The Brand
Image / reputation Awareness - market / region Development strategy Chain support / distribution of offices Marketing / reservation system contribution Potential financing Ease in securing bank loans Resale value
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The Brand
Numerous hotel chains Hotels in similar locations Similar physical products Similar services and facilities Similar power of the brand Similar guest recognition programs
So why do some brands do better than others?
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The Brand
Where is the competitive advantage?
With the individual / employee Personalized service Perception of the brand
Everybody likes to feel special
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How do hotel brands achieve the competitive edge?
Customer focus / individual needs Round the clock training of employees Creating brand awareness through: Advertising Promotions Sponsorships Marketing / Public relations
INVESTING IN THE BRAND!
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QUESTIONS?