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HOSP4040 Hotel Asset Management (Russell): Hotel Development

Developing and Planning New Hotels

Site Selection

  • Location, location, location – Site selection demands the highest level of scrutiny. Ask yourself: what challenges, if any, exist to acquire the land? Are there potential zoning issues or prohibitive architectural review standards? Is the site close to basic utilities, and can infrastructure enhancements to streets and utilities be conducted with ease? How close is it to major gateways and attractions, and what other revenue streams exist to entice visitors to the area? Why is the site available – is it lack of hotel supply or lack of consumer demand?

Which Brand Makes the Most Sense?

  • Once you have a location, choose the right brand for your hotel before any next steps. Examine the competitive set to determine the best brand to launch in your market – one that is distinctive, will have the most revenue-earning potential, and is part of a solid loyalty program and excellent distribution reach.
  • Know a brand franchisor’s strengths – the franchise company and the brand segment must seamlessly fit into the destination’s framework of existing properties. Multiple options under a brand umbrella helps developers focus on the exact segment that makes the most sense for the market, while knowing thet still can tap a franchisor's resources whether they go upscale, midscale or economy. For example, Wyndham Hotel Group’s 19 global brands span nearly every segment of the industry giving you the choice of iconic brands like Wyndham Grand, Wingate by Wyndham, Ramada Worldwide, and Microtel Inn & Suites by Wyndham. And, the company’s varied prototype offerings afford financial savings and positively impact construction time.
  • Confidence in knowing a brand will remain a long-term partner through the life fo the property abd provide support to help drive profitability is vital for developers in determining affiliation with a franchisor. 


Obtaining Financing

  • “Show me the money” is a developer’s dream, but securing financing for new property construction can be challenging, especially when many lenders may be nearing their capacity for providing hospitality loans in the current development cycle.
  • How can you improve your chance to obtain financing? “We want to see a third-party feasibility study and market analysis, precise business plan with solid projections, examination of construction and labor costs, a developer’s track record with past hotel successes, and that the market has demand for a healthy room rate,” explained Mike McGinley, General Manager, Live Oak Bank. 
  • Keep in mind: leaders feel a level of comfort in providing financing when a project is aligned with a trusted brand known for consistent business success and guest service. Aligning with an esteemed hospitality company allows you to leverage its established connections with lending institutions that can handle the risks associated with hotel construction projects.

Finding candidates

  • While automation has made hiring somewhat easier, it’s still tough since the labor force is shrinking.It’s [job fair] “still the best method that we’ve found to this date to try and get bulk candidates in the door, get them processed (and) get them hired,” Steve Martin, VP of human resources at Marcus Hotels & Resorts, said. He added that it would be nice if everyone applied online, but he doesn’t want that to impede someone who can’t. “We’ve gone back to paper applications and we use them on an ad hoc basis,” he said.
  • Acting quickly is key to getting candidates hired, Martin said, and it’s all hands on deck to make as many spot decisions as possible. He said he’s found that if an employer lets a candidate walk away, chances are that candidate will “go down the street and get a job somewhere else. … We can’t afford to really let that happen.”
  • Partnering with local agencies and universities is another strategy to take advantage of, sources said.Wanda Smith-Gispert, regional VP of talent and workforce development for MGM Resorts International, said when hiring for the MGM National Harbor in Oxon Hill, Maryland, much of the success was due to workforce development within the local community. She said the 308-room MGM National Harbor, which opened in 2016, received more than 100,000 applications. There are currently 4,000 employees working at the hotel. A unique challenge for the property was its commitment to hiring 40% of the staff from the local county and 5% from armed forces veterans. She said the recruitment plan needed to be altered to include strategies for meeting those goals, which the property was able to exceed. “Partnering with local nonprofits, government agencies, veteran and job training programs allowed us to build a pipeline of trained candidates well in advance of posting the positions,” she said.
  • Carly Mason, marketing manager at Omni Louisville Hotel, which opened earlier this year, said the property hosted a luncheon and job fair at a multi-purpose sports arena in Louisville to engage potential candidates. The 612-room hotel currently has 440 employees in place, though the team is evaluating if more staffing is needed. She said the luncheon brought in more than 1,000 applicants over three days. Each candidate was screened and more than 300 left with job offers that were “contingent on passing a background check.” “We started the new hires three weeks before we opened our doors,” she said.
  • Martin said using social media as a way to find candidates has become critical. “If it’s not on social media, it almost doesn’t exist anymore,” he said. “We rely heavily on social media; not only are our HR departments using it to post opportunities, whether it’s Facebook, Twitter or LinkedIn—especially for management positions—but we rely on the power of our networks to then take that information and share it.” On average, it’s ideal to start promoting job openings on social media about three months out from the hotel’s soft opening date, Martin said.
  • Smith-Gispert however, said MGM's recruitment strategy—which is specifically designed for the local labor market—doesn’t rely on social media as an effective way to recruit in every market. Instead MGM’s workforce development department conducts a market analysis to determine the best unique approaches.

What do to if the opening date is delayed

  • In some cases, Martin said, a new hotel’s grand opening often can be delayed due to construction or other variables, which can affect hiring. “You have the struggle of people obviously needing to work, and they may have accepted a job in May thinking they were going to start working in June, and then we lose them because they can’t wait for the job,” he said. Martin added there needs to be a fine line between being ready enough and not being over prepared, given the tendency for the opening dates to fluctuate. He said he’s dealt with this first-hand with opening the 333-room Omaha Marriott Downtown at the Capitol District in Omaha, Nebraska, last summer. Should this happen, the No.1 thing to remember is transparency, he said. “You have to make sure that (potential associates) know the story of what’s happening,” he said, since being open with this communication could allow associates the opportunity to delay giving a resignation notice to their current employer. For example, with the Omaha property, Martin said as soon as Marcus was able to give tours of the property, potential associates were invited to come in to help keep them engaged, though the jobs hadn’t started yet. Then the training and onboarding process can begin and will get associates familiar with their departments, he said, slowly ramping up to opening day. Smith-Gispert said in today’s industry, it’s rare that a property will ever be “fully staffed.”

Positions first filled

  • Mass hiring requires a two-year plan ahead of time, Smith-Gispert said, and having a clear understanding of the roles and labor inventory that exists in the market is essential. 
  • But when looking at whom to hire first, Martin said from a management standpoint it’s the GM followed by the director of sales, both at least eight months out and sometimes even a year out. He said the director of sales is needed right away to start selling future bookings and bring business in the door. Then from an hourly standpoint, Martin said he will hire engineers at least two to three months before opening day. Lastly, front-desk associates and culinary positions—which Martin calls “the heart of the hotel”—are hired.
  • But both Mason and Martin agreed that some of the toughest positions to fill right now are culinary roles. Mason said Louisville has an abundant independent restaurant scene and she was warned that hiring servers and other food-and-beverage roles would be hard. She said for the Omni Louisville the property needed to review wage scale and benefits in order to stay competitive.
  • Martin stressed that while this isn’t a new notion, everyone at a property needs to become a recruiter, especially when opening a new hotel. He said every manager at Marcus’ properties carry business cards and are encouraged to find people who fit the bill, whether it’s at a local Starbucks or a grocery store. “We’ve all now become effective at being recruiters to try and engage those individuals at any level and any way possible,” he said.