As has been shown from the above historical perspective, the hospitality industry has reached a stage in its evolution where it requires adaptation and the application of greater flexibility to its existing and new products. This will entail the development of new concepts with inherent ways or means to change content, service or image in an economical way. Service methods can be readily altered as they are primarily based in personnel skills, investment in people will need to increase and retention of staff will require a new approach to human resource manage-ment. The more difficult element will be the ability to create flexibility in the physical property. However, two aspects can influence this:
1 Construction systems are becoming more systemized and manufacture-based: The provision of flexible internal space is no longer revo-lutionary as airport terminals and such buildings as the Pompidou Centre in Paris and the Lloyds building in London demonstrate. On a smaller scale the biannual drive down International Drive in Miami dramatically illustrates how a serviced building shell can have its restaurant product com-pletely altered on an economical basis. The challenge therefore is perhaps not so great as the need to alter the established process of management thinking. The new century may be more about innovation in management than the management of systems, an approach that is taking hold in some of the more enlightened management schools. While many will argue that investors are too ‘hard-nosed’ for such thinking, it should be remembered that investment is simply about balancing risk and return ratios, something that all those working in the financial world are only to aware of but may be a little reticent to share in a public forum.
2 Bricks and brains: From an investment point of view, the industry has already seen a divergence of operations and property; the
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infamous ‘bricks and brains’ headline. This, however, suggests that, if the ‘brains’ or operation does not deliver suitable returns, those managing the asset have no hesitation in changing the nature of the operation, as the inherent value in property still tends to revolve around location. Value increases in all types of property when they are located where the most people want them to be. Therefore today’s office is tomorrow’s hotel or vice versa. Provide a versatile serviced and flexible building shell, and building use can be adapted to maximize inherent value, thereby investment risk is inherently lower. From a ‘bricks’ or property investor’s perspective, the increased capital cost to attain such flexibility delivers longer-term returns and control of, or exposure to, non-performing ‘brains’ or operations.
Before this idea or ‘concept’ can be progressed, it must pass the test of the financial concept viability cycle. While financial viabil-ity can be tested in many ways, the acid test is to fulfil the basic requirement of one simple equation:
(Selling Price Volume) Cost Profit
Chapter 5 looks at some of the systems that are commonly used for hotel development in the industry. However, if the industry Concepts
11 ● ● ● ● ● Illustration 1.2
Lloyd’s Building, London: flexible internal space in a building (Photograph courtesy of Lloyds of London)
moves into a period of innovation, it needs to develop more eco-nomical and less time-consuming methods of testing new ideas and concepts. Ideas, like potential sites, are plentiful, less avail-able are the resources to test each and everyone, hence the need to have initial hurdle tests to select those ideas and concepts that warrant further investigation and development. This is where the development of a concept brief or project brief is vital. The con-cept brief defines the concon-cept in relatively detailed written form, combining the context of a new hotel concept with the oper-ational philosophy and area standards. These two documents, if in a proper format, should provide sufficient information to estimate the concept’s operational and property development costs from benchmark costs widely available in the industry. While market studies are designed to establish specific demand, pooled indus-try analysis of different hotel locations’ performance and pricing, regionally, nationally and internationally is widely available.
Such sources provide sufficient data to establish (within defined risk factors) a quick viability test to determine which concepts or projects are in principle of potential value to warrant further research, development and investment of resources available.
Similarly, simplistic guidelines established in the hotel sector over a number of years, such as, £1 ADRR £1000 capital cost and land value not to exceed 10–15% of the total development costs, continue to be valid rules of thumb.
The five elements that form the cycle shown in Figure 1.2 may seem self-explanatory at first glance, but what is a ‘project brief’?
At this stage of the concept development stage it can be a rela-tively simple document that sets out the idea or concept. However, as it entails physical property being developed, it is essential that it incorporates an ‘area schedule’ to determine, in principle, the total area to be developed. Such a schedule can be developed rela-tively easily for any property concept using the format illustrated in Figure 1.3.
Concepts
13 ● ● ● ● ● 150 Key Bedroom Hotel
A.* 1 Module is 26.28 m2(net internal 7.2 m 3.65 m)
No. of Module Size Keys Modules B.
‘Standard’ Bedrooms (1) 26.28 m2 106 106
‘Superior’ Bedrooms (1) 26.28 m2 30 30
‘Junior’ Suites (11⁄2) 39.42 m2 4 6
‘Suite’ sq lnge tw (3) 26.28 m2 4 12
Executive Lounge (3) 78.84 m2 – 3
Disabled Bedrooms 6 26.28 m2 6 6
TOTAL 150 163
C. Floor Level Service Pantry
• Trolley storage
• Guest supplies store 26.28 m2per accommodation floor level
• Furniture Store (adequate for 30–60 bedrooms per level)
• Open area with sinks and counter tops
• Linen chute
D. Bedroom Corridor Width
(1400 mm nett increased to 1900 mm width with recess at bedroom entrance)
Nett m2 E. Public Areas and Facilities
Lobby, Foyer and Lounge area, Public Telephone 180 m2 Reception, Information, Cashiers, Porter Counter 20 m2
Porters Baggage Store 10 m2
Cleaners’ Closet 1.5 m2
Shop with Store 16 m2
plus Conference and Banqueting Manager and Secretary 20 m2 G. Daylight Required
Front Office/Reservations Area and CCTV Control 25 m2
Computer Equipment Room 12 m2
Stationery Store 3 m2
Front Office Manager 10 m2
Admin. Staff WC Washbasin & Lobby (M F) 10 m2
Telephone Operator Switchboard Room 7 m2
Coffee/Tea making facility with cupboard and 3 m2 shelving recess
H.
Financial Controller 14 m2
Accounts Office Area 20 m2 39 m2
Architects’ Storeroom 5 m2
Note: All m2listed are net internal m2requirements
(Continued )
}
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Nett m2
General Manager 14 m2
Sales Manager, F&B Manager, Secretary 25 m2 69 m2
Secretary & Typists Area 18 m2
Personnel Manager's Office 12 m2
I.
Main Bar & Lounge Area W/Bar and Store (75 seats) 145 m2 Main Restaurant (85 seater) with Buffet display unit 160 m2 Informal Cafe Restaurant (40 seats) 80 m2
Restaurant Store 6 m2
J. Function Rooms Area
• Main Function Room (2 into 1) (20 m 10 m) 200 m2
• 3 Syndicate Rooms (8 m 5 m each) 120 m2
• 3 Purpose set-up Boardrooms with storage and 120 m2 cloaks, inter-connecting (8 m 5 m)
• Separate Entrance Lobby Area 18 m2
• Cloakroom Facility 8 m2
• Operating Equipment Store 8 m2
• Furniture Store 20 m2
• Service – Hold Pantry 5 m2
• Pre-Function Area with Dispense Bar 80 m2 K. Pool Fitness Centre Facility 450 m2 Pool – water surface (15 m 7 m) 153 m2 Changing Rooms – Male & Female 72 m2
Solarium Room (2) 12 m2
Fitness Equipment Area 64 m2
Sauna Room 'UNISEX' 8 m2
Turkish Bath with high impulse shower area t.b.a.
Pool Area Shower(s) 34 m2
Spa Bath/Whirlpool 8 m2
Plant/Pump Area (circulation inclusive) 30 m2 Reception counter, refreshment and seating area 46 m2 Attendants/Manager Office and Store Room 12 m2 One each of M & F Toilet via Reception 7 m2
L. Main Kitchen Area 150 m2
Comprising: cold prep. area hot prep. area.
Dish, glassware and potwash areas
Chef's Office (raised) 6 m2
Chef's Day Store 4 m2
Room Service 11 m2
Staff Dining Room with equipment 38 m2
Crockery/cutlery, etc. … Store 8 m2
Cold Room I II III Freezer Room 19 m2
B.o.H. Corridor width: 1.75 m t.b.a.
M.
Dry Store 15 m2
General Store 16 m2
Beer Cellar 16 m2
Beverage & Wine (chilled) 14 m2
Tobacco, Wine, Spirits 14 m2
}
Concepts
15 ● ● ● ● ●
N.
Empty Bottle Store 10 m2
Refuse Store 12 m2
Receiving/Delivery Platform (covered) 18 m2 Cost Controller and Receivers Office 15 m2 O. Housekeeping Department (including circulation) 80 m2
• Linen/Uniform issue/storage
• Guest Supplies Store 3 m2
• Housekeeper's Equipment Store 6 m2
• Housekeeper's Office 7 m2
• Sorting Area 12 m2
• Trolley Storage Area
• Detergent Store 6 m2
With Laundry
Additional for Equipment 22 m2
P. Staff Changing Facilities
• Male (lockers, showers, urinals, wbasin, wc’s) 26 m2
• Female (lockers, showers, wc’s, wbasin, Bunny) 30 m2 Q.
Maintenance Manager Office 8 m2
Workshop Maintenance Dept. (1.4 m 2.85 m) 2 20 m2
Spare Parts/Tools Room 8 m2
R.
Telecommunication, Emergency supply equipment, 10 m2 Battery Room (chilled A/C)
S.
Telephone Hardware, U.P.S. Equipment Room, chilled A/C 10 m2 T. Plant Room Area (excluding Pool Plant)
If Bedrooms are not cooled i.e. Radiators and Pressurized 3.5–4% of total gross surface square meterage Corridors A/C
Public Facilities and Admin. Areas A/C comfort cooling Food Prep. Areas A/C with spot cooling
If Bedrooms are comfort cooled or chilled A/C with all 4.5–6% of total gross surface square meterage Public Areas/Facilities and Admin. Areas A/C comfort
cooling and Food Preparation Areas A/C with spot cooling U.
The following areas are not specific as they depend on completion of concept designs, particularly height and joint planning with Consultants:
Internal
• Circulation generally
• Lifts
• Lift Lobbies – guest, staff/service
• M & E Services, including:
– Water storage and heating – All ventilation and air conditioning
(Continued)
As can be seen from the example in Figure 1.3, each operational and public area seen as required for delivering the relevant ser-vice and product is scheduled and an appropriate space allo-cated. The total building area can then be estimated in a simple manner by multiplying the area with the benchmark building cost per square foot/metre for the relevant location. Building costs for relevant building types can be accessed from benchmark data published by such companies as Davis Langston Everest – International Cost Consultants. For the hotel sector they publish Quality Time & Cost, which is updated annually and gives bench-mark-building costs for each hotel market segment type. There is lack of a uniform system of definitions for such elements as Furniture, Fixtures and Equipment (FF&E) in the hotel industry.
The effect is that caution must be used in elemental figures
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– Fuel storage if applicable
– Electrical substation – high voltage – Control and switchrooms
• Covered access to entrances/porte cochères
• Flag poles and signs
Nett Gross surface area per room average to target 53 m2 7 950 m2 56 m2 8 400 m2 This comprises all levels inclusive of:
• Plant Rooms and access to escape staircases
• Emergency staircases
• Corridor stairways
• Stairway lobbies
• B.o.H. corridors
• All internal circulation areas
• Any facilities located within
• Underground car-park levels
• External wall thicknesses Notes
• All square meterages specified are NETT requirements.
• Areas of service ducts, flues, chutes and lift shafts are not included in usable areas.
• If cost effective, plant should be located in the roof void/space areas.
• Gross surface square meterages excludes:
– Underground car parking spaces and related circulation – External terraces, walkways, etc.
• Loading dock delivery yard area should include space for skip and compactor
Figure 1.3
A typical hotel area schedule (150 Key Bedroom Hotel)
for comparative purposes. The total costs per square metre or square foot are satisfactory for an initial capital cost estimate. It should be noted that such data are based on various assumptions related to the site’s condition and other aspects, many of which need to be considered. It is therefore advisable to obtain local professional advice. Most experienced industry sector cost con-sultants should be able to prepare a preliminary cost plan based on a schedule of areas and basic knowledge of the site constraints and other conditions, without the building having to be designed in detail. The criteria that will normally affect cost levels include:
•
Site area – storey height•
Unit size – staffing•
Location – labour costs•
Construction time – volume•
Building services – quality standards.Similarly, potential earnings in any given location will be influ-enced by:
•
Demand and supply•
Brand and pricing policies•
Competitive supply•
Brand and product suitability•
Size and facility mix.A simple and useful way to evaluate hospitality concepts can be undertaken by defining a project brief with schedule of areas, resultant capital costs and running a financial feasibility model.
This is shown in the alternative catering concepts in Illustration 1.3. Remember that Concept 2 utilizes a traditional format while Concept 1 introduces ‘flexibility’ in terms of location so the trad-itional financial model will require adjusting for Concept 2.
For the financial model the applicable land and building costs in your own locality can be used. It must, however be remembered that the exercise is simply to test the concept in general terms.
Accordingly, there is no necessity to go into detail, as the purpose is to determine the most suitable investment option, for further investigating more detailed design, operational systems develop-ment and financial analysis.