The New Hotel Development Project Life Cycle - Doing the Right New Hotel Project Holistically, and Doing it the Right Way

Abstract

Based on previous research, the authors know that nowadays, new hotel developers in Asia typically appoint interdependent – but non-integrated – separate entities during various phases of their projects, to make the business case, and to design, build, open and operate each new hotel asset. Consequently, important opportunities for integration and synergistic improvements between phases in new hotel development projects can be missed. There are inherent inefficiencies and crucial conflicts of interest in this approach, which inevitably lead to difficulties and problems during and after the project. Previous studies have also demonstrated the root causes and consequences of poorly planned and executed new hotel opening projects, where time delays of multiple months and multi-million US dollar cost overruns against the initial project budget goals, coupled with massive opportunity costs, are the norm. In this paper, the authors introduce a well-defined project framework that hospitality asset owners and developers can follow, in order to avoid these problems and develop their new hotels efficiently and effectively. It also illustrates how this framework can be used to understand project costs and shed new light on how to develop new hotels cost effectively. There is surprisingly little research literature on these important topics. To ensure an optimal outcome is achieved, this paper advocates that all phases of this New Hotel Development Project Life Cycle must be considered holistically, in order to ensure coordinated planning and execution of project activities in each phase, and integration of the interdependencies across all phases.