THE ESSENTIALS in HOTEL OPENINGS

İstanbul-Turkey 2014

Ahmet F. Seymen

This work reflects my experience during the opening of hotels in

Turkey.

My findings only represent the situation and conditions pertaining to the hotels I have opened.

It does not reflect other projects and should not be generalized for the Turkish hotel industry.

Turkish investor profile

Pro’s & Con’s of Investor Companies

Pro’s

High enthusiasm

Young, dynamic & flexible

Lean & not top heavy structure

Quick in decision making & less red rate

Turkish investor profile

Con’s

Business origins from different industries;

(Construction, Textile, Automotive. Most are not hoteliers)

Majority are family owned & operated companies;

(Lack of corporate structure, professional staffing and application of sound business practices)

Not custom to work with professional firms and consultants, which deliver research, feasibility studies, investment reports and concept designs

Pro’s & Con’s of Investor Companies

Turkish investor profile Con’s…

Limited utilizing of funds and incentives offered by government and institutions

Limited Access & knowledge in understanding & applying criteria and specifications of international hotel chains

Hesitation in hiring/working with reputable and professional firms in the industry

(Architects, Interior Designers, Construction Firms, Law & Legal Offices, Financial Institutions, Consultants)....

Turkish investor profile Con’s…

Lack of comprehending the project as a whole

(Net Rate of Return, analysis of business trends and major cost contributors)

Limited knowledge in understanding the disciplines involved in planning and implementation stages of hotel opening

Less willing in hiring of operational staff in the very early stages of the opening

Research Needed for the Project

Socio economical growth Present & future demographical growth

analysis Growth patterns for Industrial, Agricultural,

Commercial and Technological sectors Import & export growth and trends Present and planned industrial investments

for next 10 years

ECONOMICALCountry wide

Location Proximity to Airport Proximity to major roads and arteries City center, Commercial zone, Industrial

zone Proximity to Exhibition & Congress area,

Hospitals, Universities, Metro/Train Stations, Stadiums, Schools, Dorms, Bus Stations, Museums and Recreational facilities etc.

EconomicalGreater Metropolitan Area

Hotels & Lodgings in different categories(Ministry – Municipality Licensed)

Concept, Facility & Products offered Total rooms & bed capacity Yearly occupancies and ADR Construction of on-going Hotel projects Planed Hotel projects 5-10 years

ECONOMICALTourism Infrastructure

Number of tourist arrivals Corporate clients Other business clients e.g..

(Convention, Fair, MICE etc..)

Health & Medical tourists Local clients Other potential clients

ECONOMICALTourism Infrastructure

Market & Competitor AnalysisA. Analysis of the Greater Metropolitan (GM) Area Tourism infrastructure and transportation e.g.. Roads, Highways, Trains, Metro, Fairies etc.. Yearly Income obtained from Tourism & Travel Expansion rate of the GM area for the past 10 years

10 year growth projection for GM areas

B. Location Unaccommodated demand

Latent demandC. Competitor Analysis

Analysis of Primary & Secondary competitors

ECONOMICAL

Analysis of Government Policy & Procedures

Ministry of Tourism

- Hotel Spec’s & Classification - Fire Safety & Building Regulations - Green Hotels & Environmental Regulations

- Building Codes & Regulations

- Handicap Requirements

Type Specification Hotels

Budget / Economy

Room size 12-18m2 net. Personnel per Room 0.1-0.2/roomLimited F&B facility

Etap, İbis, Holliday-Inn Express, Easy Hotels

Midscale Room size 20-24m2 net. Personnel per Room 0.4-0.5/roomLimited F&B facility. Additional facilities (meeting room, fitness.

Mercury, Holliday Inn, Courtyard by Marriott,Hilton Hampton Inn

5 Star &Upscale

Room size 25-30m2 net.& up Personnel per Room 0.6-0.8/roomMultiple F&B facilities. Various facilities with alternative concept and capacities. Ball room, Meeting rooms, Executive Floor, Business Centre & Lounge, Spa & Fitness Center…..

Radisson, Sofitel, Hilton, Intercontinental, Marriott

Type Room Cost*

Budget/Economy 40.000 - 60.000 Euro

Midscale 60.000 - 100.000 Euro

5 Star & Upscale 150.000 - 200.000 Euro & up

FINANCIAL

FINANCIAL

Related Costs Budget Mid Scale 5 star & upscale

Euro % Euro % Euro %

Site & Area Improvements

3.000 5 5.000 5 10.000 5

Construction 27.000 45 45.000 45 90.000 45

Soft Costs 3.000 5 5.000 5 10.000 5

Technical Equipment 15.000 25 25.000 25 50.000 25

Fixture Furniture & Equipment

7.200 12 12.000 12 24.000 12

Operating Supplies & Equipment

3.000 5 5.000 5 10.000 5

Pre-Opening & Working Capital

1.800 3 3.000 3 6.000 3

Total 60.000 100 100.000 100 200.000 100

Critical factors which contribute to enhance the performance and has positive impact on the project

1.Location2.Concept3.Service & product standardization4.Being up to date (physically and technologically)

ECONOMICAL

Guest Preference Eeconomic Mid Scale 5 Star & Up

Central location Close to venue Easy access

Welcoming Problem free check-in/out

Personel service

Clean Room

Clean & efficient bathroom

Breakfast Minimal or selective against charge

Standart buffet breakfast

Selective & extended buffet

breakfastTechnically up to date

Facilities Minimum requirement

4 star requirement 5 star red. & additional

Educated & friendly staff

Product & service standards

Ecological & environment friendly

OPERATIONAL

Analyzing & understanding the specification of multi-national hotel chains

1. Design specifications' (area usage & utilization, guest areas, staff areas, elevators, corridors, storage facilities, offices', kitchens, receiving areas etc...)2. Guest room & bathroom specs3. General Area criteria’s (Restaurants, Bars, Meeting rooms, SPA etc…)4. Electrical & Mechanical specifications5. Fire & safety regulations6. Environment friendly & Green Hotel Specs…

TECHNICAL

Preparation & application of

«PROJCET MANAGEMENT» plan Structured work plan & meetings

between; Owning company, Architect Office, Technical Support Office, Management Company, Contractors & subcontractors as well as suppliers.

Daily field trips to asses the implementation of scheduled works in conjunction with «PROJCET MANAGEMENT» plan

TECHNICAL

Construction Phase & Sequence

a. Site & Land improvements

b. Shell & core construction

c. Mechanical Works (ducts, ventilation, heating, water, plumbing, drainage, shafts & piping…)

d. Electrical Works (High voltage, Bonding, LV, etc.…)

e. Walls & separators (brick, ytong-bims-dry walls etc…)

f.Marble or other wall/surface coverings

g. Ceilings

h. Doors

i. Wall paper

j. Paint job

k. Carpeting, wood floors

l. Fixed & mobile furniture - Décor

m. Lighting (interior-exterior)

n. Exterior & facade jobs - Landscaping

TECHNICAL

TECHNICALSequence Days

-Month

% Days-

Month

% Days-

Month

%

Site & Land improvements, Shell & core construction

122-4

39,0 180-6

39,0 213-7

30,0

Finishing Works 213-7

60,0 300-

10

60,0 424-

14

60,0

Defects & re-touches 30-1

1,0 60-2

1,0 93-3

10,0

Total Days / Months 365-

12

100,0 540-

18

100,0 730-

24

100,0

Initiation of Company (Corporation, LTD, Holding) Building & other legal permits form local

government authorities Electric, Gas & water supply permits Permits from Ministry (investment & operational) Franchising, Management or Leasing agreements

from National /International

LEGAL

5 critical issues which prolong hotel openings Municipality & Government Office permits % 40

Obtaining of necessary funds % 30

Environmental & community related issues %12

Timing of construction & work schedule % 10

Contractor & subcontractor issues % 8

LEGAL

Total of 33 years in the Hospitality Industry

1.st two years working as Receiving Manager and Assistant Purchasing Manager (OGDEN Food Service) Miami, USA

Following 8 years worked as Restaurant Manager & Director(Dobbs Houses & Restaurant Associates of America) Miami - New York, USA

Last 23 years worked as F&B Manager, AGM, GM, Director of Operations, Area GM, Division President. (Omni Hotels, Sofitel, Hilton, Ramada, Corinthia, Dedeman, Byotel-Byomed, CVK Group of Companies

Total of 16 hotel openings

Hacettepe University, School of Business, BS

Florida Int. University, School of Hospitality, MS

AHMET F. SEYMEN