How Do you Know When to Build a Hotel?

At the outset, it's actually quite simple. The first question to the existing hotels lead a healthy life, are they enjoying high occupancies? And, are they profitable? If the answer is yes...proceed with a detailed project analysis, develop a meaningful concept, find a site and some money. If the answer is no (or, there aren't any hotels to start with), the market has a demand problem. And, that needs to be fixed first, before giving any thought to adding hotel rooms. In rare cases, the hotel development itself generates incremental demand. They did that in Austin by expanding the convention center and adding an 800 room Hilton to attract larger groups.  They did it in Greenwood by adding the Alluvian Hotel, spa, cooking school and retail to a small town in the middle of the Mississippi Delta. It's also done with water parks and golf resorts. But, more often than not, demand problems are solved primarily with experiences incidental to the hotel component. And, that's a much tougher problem to solve because it demands risk taking, collaboration between people with differing world views, passion for new ideas, unpopular decision making and a willingness to place a higher importance on long term benefits...characteristics not often used to describe community based development. So, these efforts often get stuck...because there's no leadership and no commitment to being remarkable.

Sometimes, an argument is made that "new" will improve the neighborhood and everyone will benefit. New is always nice, but, that lasts maybe a year...then, you still have a demand problem. If the existing hotels are struggling, people aren't coming. And, if people aren't coming, there's a reason...or, two, or three.

Some of the things I look for when sizing up a market for hotel and tourism development:

  1. Is it clean?
  2. Is there enough to keep someone busy for 3-5 days?
  3. Is there reliable and attractive public transportation?
  4. Are the locals proud?
  5. Is there good food? Do locals send you to a chain or fast food when asked for a restaurant recommendation?
  6. Are community leaders passionate? Is there a "hair on fire" attitude about them? Do they rally around a cause?
  7. Is there a clear story?
  8. Are people happy?
  9. Do kids leave or stay once they grow up? If they leave, do they come back?
  10. Do projects get killed for short sighted reasons, i.e., architectural components, zoning requirements, etc.? Or, do leaders find a way to compromise and get things done?
  11. Is there a homeless and panhandling problem? This is a real tourism killer.
  12. Is quality education available through the secondary level?
  13. Are the arts established and supported?
  14. Are there ample parks and green spaces?
  15. Do the locals understand the impact and want tourism in their community?

I know there are many more...but, it's a start.

Do something meaningful. Do something spirited. Do something people want.