Investment in luxury hotel projects, Dejan Djordjevic

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Investment in luxury hotel projects, Dejan Djordjevic

  1. 1. Investment in luxury hotel projects EIAT Conference Belgrade September 21-23, 2012
  2. 2. What is a luxury hotel?
  3. 3. June 2009
  4. 4. Prime location
  5. 5. Unique experience
  6. 6. Personalized service
  7. 7. Attention to detail
  8. 8. Spacious rooms
  9. 9. Luxurious bathrooms
  10. 10. Prime food and beverage selection
  11. 11. Branded amenities
  12. 12. Exquisite spas
  13. 13. Exotic interiors
  14. 14. Stylish
  15. 15. Unique settings
  16. 16. 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
  17. 17. Luxury hotel construction cost? Over $ 600,000 / key
  18. 18. Luxury resorts over $ 1 million per key
  19. 19. Historical buildings over $ 1.5 million / key
  20. 20. The Atlantis Dubai over $ 1 billion
  21. 21. Emirates Palace – over $ 2 billion
  22. 22. Designer Hotels Ian Shrager Armani Hotels Missoni Hotels (Rezidor group) Bulgari (Marriott group)Construction costs usually over $ 1 million / key
  23. 23. Designer Hotel – Ian Shrager
  24. 24. Designer Hotel - Ian Shrager
  25. 25. Designer Hotel – Ian Shrager
  26. 26. Designer Hotel - Armani
  27. 27. Designer Hotel - Bulgari
  28. 28. Designer Hotel - Missoni
  29. 29. 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
  30. 30. Why invest in luxury hotels Prestige / Trophy asset ROI - good returns Investments in real estate / diversification Tax benefits International exposure
  31. 31. 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?
  32. 32. The Brand is the keyWhich brand to choose?
  33. 33. 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
  34. 34. The Brand Numerous hotel chains Hotels in similar locations Similar physical products Similar services and facilities Similar power of the brand Similar guest recognition programsSo why do some brands do better than others?
  35. 35. The Brand Where is the competitive advantage? With the individual / employee Personalized service Perception of the brand Everybody likes to feel special
  36. 36. How do hotel brands achieve thecompetitive 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!
  37. 37. QUESTIONS?

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