FEATURE
|
EXPERT ADVICE
Finding growth
The challenges anf pitfalls of navigating complex ownership and management structures
by ROBERT ALLEY, chief operating officer at Roomzzz Aparthotels
W
here do you start in the stand still for months and even years brief and brand must be compared
complex world of development? where the short-term expectations to new builds where you might get
Looking at all the moving parts, are in conflict with the long-term value what you want but compromise on the
there is a lot to think about: property of a good operator tenant, who can location. Conversions seem to be hard
owners, developers, agents, valuations, generate income and lifetime benefit for to stack up, with high expectations on
planning and licensing, funding, leasing, a development. And that’s without the existing value and high conversion costs
owning, managing, operating companies, intrinsic value and character that unique making it hard to breathe life into some
brands, competitors. brands can generate for an owner and of the amazing city centre buildings
the wider scheme. which sit dormant today.
For ambitious brands like us, even
with a healthy covenant able to offer up
It’s a shame that great sites lie empty
For us, the aparthotel and serviced
a strong institutional lease or raise the because a lease cannot be agreed for apartments category is finally getting
development capital, it’s still not as simple long-term performance and end value some of the attention it deserves. Long
as sticking pins in the map of where we’d rather than just short-term returns. This considered too ‘alternative’ for investors
like to go. vision must also be shared with the and funds, we were some way down the
planning and licensing committees, who list of potential solutions, as developers
and not get caught up in the endless are less concerned with the valuation and valuations missed the potential of
cycle of property prospecting. Be clear but can dramatically support the process high occupancies, strong guest retention
where you are heading and the variables to bring fresh purpose to old and new and great operating margins. The case
you can control to get there. Buying, locations alike. for aparthotels today is strengthened by
It helps to start with a clear strategy
developing, leasing, managing and
Another big question to think about is
these reliable incomes, flexible approach,
franchising are all options on the table. the complexity of conversion versus new established brands, solid model and
Location and site selection are unique to build. Some of the best opportunities, distribution, proven operators and even
your brand or business, so let’s say you’ve locations and exciting buildings are alternative use.
already leapt over that hurdle. You know standing around empty begging for where you want to be. You understand attention, which seems like a golden lease discussion is taking shape, the yield
the reach and distribution you want to opportunity for development and growth. offered by your ‘alternative’ category
achieve and the markets where you can However, the intricacies of design and might not stand up against the old
make an impact. But making the numbers complexity of cost drives out prohibitive familiar cookie-cutter solutions like Private
work is a big challenge. rents once again, unless the long term Rented Sector (PRS) and office. The path
value of a Full Repairing and Insuring to successful development still needs
and clarity of vision to get a deal over the (FRI) lease and asset appreciation is a bit of vision and perspective in the
line. Each party needs to see all sides, rolled up into the mix for the longer view valuation to get it off the ground.
which means the owner/developer should without making the lease cover the bill also appreciate the long-term value that from signature.
In today’s world, it takes some focus
the operator, the tenant and particularly
New builds would seem to keep
However, even when it looks like your
The world of hotel operations is
increasingly complex these days with
brands, operators, owners and asset
the brand can bring to the arrangement things simple these days with a formula managers all taking a piece of the action.
and the end value. No deal gets off the for the major brands that seems to It’s no longer obvious who is actually
start line without a collaborative approach work. But location is always king and the running the show, and the guest has to
that works from every angle. challenges of making existing building weave their way through so many brands
conversions in great locations fit the claiming to be the answer to all their
We’ve seen too many opportunities
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www.hotelowner.co.uk
February 2019