Jones Lang La Salle

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Overview of property development and construction in the hotel and leisure markets – latest trends, key players and unique aspects of the sector

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  • Agenda is essential – make sure there is a key message to make about each point on the agenda – that is relevant to your audience Think sales – why are these people here today – “we’re going to talk to you about the opportunities that exist out there in the market – identify the opportunities that potentially exist for you and the benefits that working with JLL will help them to achieve Make it clear how deep our client base goes – intro to the active players and new entrants – our ability to monitor the market means the people in the room can be proactive in developing relationships with the movers and shakers How will our knowledge
  • This slide should display structure which illustrates what you are talking about. We understand the differing structures and can work to develop something tailored to etc – and work with all these clients Is the text absolutely necessary? Can you speak from the structure diagram to cover these 3 points? Owner owns property and hotel business Owner pays manager a fee to operate the hotel on their behalf Complex business structure There must be a key message to every slide
  • Need to have ONE focus point on every slide – e.g. what is the most important piece of information on here – use colour to highlight or reduce content
  • Graph instead
  • Jones Lang La Salle

    1. 1. Opening the door to opportunity Hotel Development & Construction Latest trends, key players and unique aspects of the sector Michelle Webb Toby Wait 27 April 2010 opportunity
    2. 2. Today’s agenda – spotlight on… <ul><li>Brands of opportunity </li></ul><ul><ul><li>Active players and new entrants </li></ul></ul><ul><li>Hotel operating structures </li></ul><ul><li>Hotel development </li></ul><ul><ul><li>London </li></ul></ul><ul><ul><li>General trends </li></ul></ul><ul><li>Questions </li></ul>Key players, trends, and unique aspects of the sector
    3. 3. Brands of opportunity Active players in the marketplace
    4. 4. Brands of opportunity New entrants / operators
    5. 5. Hotel operating structures – management contract <ul><ul><li>Owner owns property and hotel business </li></ul></ul><ul><ul><li>Owner pays manager a fee to operate the hotel on their behalf </li></ul></ul><ul><ul><li>Complex business structure </li></ul></ul>Subdued investor appetite
    6. 6. Sample summary hotel P&L Management contract 29.5% £2,525 Net Cash Flow 7.3% 624 Other Fixed Costs 4.1% 350 Incentive Fee 3.0% 257 Base Fee (3% revenue) 43.9% £3,756 Gross Operating Profit 18.4% £1,578 Undistributed Expenses 37.6% £3,220 Departmental Expenses 000’s £8,554 Total Revenue £77.09 RevPAR £104.18 ADR 74% Occupancy 180 Room Count
    7. 7. Hotel operating structures – franchise contract <ul><li>Established hotel brands allow independent operators to use their brand and reservation systems </li></ul><ul><li>Franchise fee paid to international hotel company </li></ul><ul><li>Typically owner/operators – potentially more efficient </li></ul>Active franchisees
    8. 8. Sample summary hotel P&L Franchise contract 33.6% £2,878 Net Cash Flow 7.3% 624 Other Fixed Costs 3.0% 253 Base Fee (5% rooms revenue) 43.9% £3,756 Gross Operating Profit (AGOP) 18.4% £1,578 Undistributed Expenses 37.6% £3,220 Departmental Expenses 000’s £8,554 Total Revenue (Rooms, F&B, MOD) £77.09 RevPAR £104.18 ADR 74% Occupancy 180 Room Count
    9. 9. Hotel operating structures – occupational lease <ul><li>Owner / Landlord receives a rental income – fixed or variable </li></ul><ul><li>Operator / Tenant receives remaining income from trading </li></ul><ul><li>RPI / CPI or open market reviews </li></ul>Strong investor interest in indexed link leases
    10. 10. Source: Jones Lang LaSalle Hotels Hotel operating structures UK hotel investment market: deal type
    11. 11. Development trends – London v regions Indicative gross development value per bedroom
    12. 12. Development trends – London v regions Less build cost per bedroom
    13. 13. Development trends – London v regions Less other development costs per bedroom = residual site value
    14. 14. Hotel development in London <ul><li>Activity focused on leases / budget sector </li></ul>Reduced development pipeline since 2007/08
    15. 15. Development trends – office conversions (Forecast)
    16. 16. Office conversions Travelodge, Tower Hill Premier Inn, Cardiff Providing the expertise to know what to look for
    17. 17. Development trends – the requirement for sleep Efficient and effective use of space feeds the bottom line
    18. 18. Development trends – sustainability Responsible development achieves win-win status for all
    19. 19. Development trends – refurbishments A growth market?
    20. 20. In summary… <ul><li>Complex and unique properties </li></ul><ul><li>Combine property and business investment principles </li></ul><ul><li>Effectively ‘daily tenanted’ </li></ul><ul><li>BUT </li></ul><ul><li>Major opportunities exist in London </li></ul>
    21. 21. Questions Questions

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