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5-star hotel investment project: Variables to consider

5-star hotel investment project: Variables to consider

Considered as one of the jewels in the crown, 5-star hotels are the resorts that everyone wants to own or stay in. Characterised by their luxury and sumptuousness, this type of accommodation is often a very tempting project. If you also have in mind to make an investment project of a 5-star hotel, it is […]

Considered as one of the jewels in the crown, 5-star hotels are the resorts that everyone wants to own or stay in. Characterised by their luxury and sumptuousness, this type of accommodation is often a very tempting project.

If you also have in mind to make an investment project of a 5-star hotel, it is better that you take into account some variables. Here we will tell you what we consider to be the most important ones for the success of the project.

 

The market you are targeting

One of the most frequent tips for new business development is to create a company around the market and not a market around your company. Many managers fall into the short-sightedness of first developing a product and then finding a market for it.

That is why you should start by defining the market you will target. Although this will be a market with high purchasing power, it can be segmented. For example, towards a sector of family travellers, adults, foreigners, senior citizens, etc.

 

The concept of your project

Once you know which market you are targeting, the next step is to develop the concept behind your hotel. Here there are two options, the first is to look for an existing concept, for example, by checking how much a 5-star hotel franchise costs and paying for an existing brand.

The second is to create your own concept based on the experience you want to offer your guests. For example, if you will be a youth hotel, you can create a concept of party, fun and safety within your hotel.

 

Your strategic location

Another key to the success of any 5-star hotel investment project is its location. This plays a key role, both in attracting guests and in the feeling of luxury and exclusivity.

A 5-star hotel is located in an area of high added value with benefits such as having a connection to the airport or being in one of the best areas. On beaches, for example, a 5-star hotel investment project should be located near the most paradisiacal beaches.

inversión hotel 5 estrellas

The experience you are going to deliver

You may have the best location and a unique hotel concept, but if you don’t offer a superior experience, it won’t do any good. It is enough to see that the worst rated hotels are the ones that offer bad experiences that do not correspond to their cost.

This is where the concept of cognitive dissonance comes in, which, in marketing, talks about the difference that can exist between the expectations a consumer has and what they receive. In your 5-star hotel investment project, you must match those expectations and live up to them by delivering a 5-star or better experience.

 

Rooms and facilities

Of course, another of the most important variables when developing a project of this style are the facilities. That is why a 5 star hotel must be guided by experts in architecture, engineering, design and more.

Both your rooms and your facilities such as restaurant, swimming pool, night club, etc. They must match the concept and luxury you are selling, as well as the price. A very simple and effective tip to guarantee the quality of your rooms is to test it. Would you spend a night in that bed? Would you stay in that room?

 

The tourist and entertainment offer

A good 5-star hotel investment project contemplates more than just providing accommodation. In fact, most include concepts such as the sale of all-inclusive plans with food, activities, use of certain facilities, parties and events.

Having a good entertainment and activity plan allows you to create the feeling in your guests that they are getting more for their booking. In addition, it helps to enhance the experience and the stay. In the long run, this is a crucial factor in distinguishing you from other hotels in the segment.

 

The investment you are going to make and its origin

In any investment project, money plays a very important role. As the name suggests, the purpose of an investment is to make the money grow. If the money is not even recovered, the project simply ends up being a failure.

For a project to open a 5-star hotel, the initial amount for the investment is a key role. But that’s not all, you also need to be clear about the source from which it will come and whether this investment will have an additional cost, as if it were debt. You must also define a margin of how much the budget can increase, as the initial budget is not always the same as the final one.

 

The numbers have to be profitable

Another important part of your 5-star hotel investment project should be the financial, cost and sales projections. This is because numbers play a very important role, especially when you want to estimate your profitability.

By having clear numbers you will have clear objectives to achieve. For example, when you know your costs you can define your break-even point and the sales needed to meet it. This way you will have a much clearer direction to achieve the profitability of your project.

 

The future vision of the project

The last part of your 5-star hotel investment project should be the future vision of the project. It’s not just about opening your hotel and flowing with the market, rather, you need to define where you want to sail and how you will improve your ship.

What will happen when you need more rooms? How will you improve the guest experience in the future? How will you grow your brand?

The importance of having the right direction

At IHCS we help you create a 5-star hotel investment project designed for success. We will guide you through every stage and advise you on how to achieve the success and profitability you desire.

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