Five Star Hotel

Challenge

How to integrate hotel design, construction, management and financing issues into a viable business model

Financing:

  • How to raise the right amount of debt
  • How to ensure that the hotel’s operating cash flow would service the debt

Branding:

  • How to select the right hotel operator (branding)
  • How to marry the hotel design with the hotel “economics”

Solution

  • Identify the right project sponsor
  • Identify the right designer
  • Identify the right hotel management with
    the right “brand”
  • Make the project “bankable” with optimal capital structure (debt & equity)
  • Canvass willing lenders for pricing and tenor
  • Form a “club deal” with interested lenders
  • Cash flow modeling to ensure that the operating profit generates enough cash to service debt
  • Identified reputable operators of five star hotels
  • Negotiated the hotel management agreement (HMA)
  • Agreed with the operator on key performance indicators as part of the HMA (ADR, RevPar, occupancy, maintenance capex)
  • Ensured that the hotel design and layout optimized cash generation