You must have often heard at various events, whether seminars, meetings or public discussions in terms of choosing a location before starting a property business. They often say Location location location in Hotel Location Selection. Location is one of the top selection criteria for travelers when choosing a residence or hotel. The location has a big impact on your hotel request and therefore will affect the price you can offer to the market for your hotel room. So when starting a new hotel, the process of location selection is a key step that should not be taken lightly.
It is important to remain objective in the site selection process. It’s tempting to get carried away and see things through your sunglasses, dreaming up the concept of a new and cool hotel to be true. Because if the location is not what you want, you will not be able to meet your financial projections. And it will bring your newly launched hotel business in a variety of issues. Your hotel really stands or falls because of its improper location.
Growth of the environment to come
As the population grows, rest assured that the environment will always evolve and this is bound to happen. Even experienced large hotels will consider the location factor. Sometimes we need to create a new environment by cleaning up the area and becoming a catalyst for improving underdeveloped or abandoned environments. This can sometimes work well but many times too many fails.
A perfect example of success is Alam Sutra, Summarecon and BSD which is a rapidly expanding environment with popular business and residential areas, including many new hotels like Jakarta, is getting congested. This arises because it is not the first hotel to move there, it is the encouragement by the citizens who initiated this area into a new magnet and its development thereafter.
Outside Jakarta such as Bandung, Bali, Surabaya and other cities in Indonesia, the same thing happened. It is a busy area and fast coming so people are also interested to escape from the busy city center. We of Equity Property Management really work smartly at the opening of a very exciting new hotel and property concept in this part of the city.
Your Client needs
So before we wonder to our clients, we should ask ourselves who the end users of our property will be. What will drive them to book a hotel and do business there?
- Proximity to demand generators such as business areas, tourist attractions, industrial parks, colleges, hospitals, airports, major roads for traffic, etc.
- Transport connectivity: road, taxi, MRT, LRT, subway, bus, train, walk, bike path, etc.
- Deals around: restaurants, bars, shops, etc..
What location are your guests looking for? How is sensitivity the price? Are they looking for exchanges between price and location? Or do they prefer to pay a high fee to stay in the middle of town in a prime location?
In addition, what needs to be offered besides the hotel itself? And how easy is it to get to where they want to be? Because remember they do not come to your hotel, they have other travel motives!
We should not forget the important lessons we have learned above, what will inevitably not change in the environment, which has the potential to have a negative impact on our hotel business.
So in a nutshell, which guest market segments we are targeting, and what their needs are …
Does your location meet the needs of this market segment?
Free Online Research Tools
Location Locations Location is what many in people rack up by marketing sites and social media to evolve. Just google example. Try you type in Google search engine “Hotel In Bali”. Google will recommend you thousands of hotels in Bali. Try more specific again, for example, “Hotel in Kuta”. Google even displays much more results than what you expect
From this result, you can get an average price level per star rating for each area throughout the year. Such a price index will provide you with valuable insights into the revenue potential of a hotel in every part of the city. You’ll notice that sometimes only a few locations can have a huge price impact, especially when you’re on the city’s border.
A classic example is that the OTA includes a list of hotels that actually reside in the actual city, and hotels located in neighboring cities are not included in the search list. If your hotel location is not part of the main destination list, you will see a large drop in demand. So be careful where you are.
New social media platforms as review sites like TripAdvisor, for guest reviews on OTA gives us valuable insight into how consumers assess the location of hotels around your location. This score should be considered because if it is too low you will be limited from the start on how high a score you can achieve.
Personally, I will conduct a survey of hotel reviews in the area to gain an understanding of how this may affect the overall value of my review. At least I want to know that I can still achieve at least an average of 8.0. But if I know the score of the location in the neighborhood around 5.0, I no doubt open a new hotel here.
What else? Of course, there are other considerations that are also very important.
- Does the location zoning allow a hotel? Or if you can not try to post to change.
- Are the utilities available at this location? Sewers, water, electricity? Gas (optional)?
- Is the size of the land possible and enough space to be built to achieve a healthy ROI?
- Can you buy or rent a building or land? And does the owner consider swapping sections in return for equity in the hospitality business? or more in the know with BOT (Built Operate Transfer)
- How many hotel rooms are there in this area? Is there already a successful hotel?
- How many new hotels and rooms are planned for development in the surrounding area?
And there are many things to think about. But I think we’ve given enough time and images to start now.
Here are 2 articles from our blog will also be very useful:
Hotel Market Research
Business Plan Hotel
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