



Closing the ROI Gap and Creating Value
Closing the ROI Gap
Hotel projects often miss their target return on investment. Besides too much optimism in market projections, the most common causes are:
Excessive investment into non-revenue generating and low-return areas
Weak project management during the development phase
Poorly negotiated agreements with the brand and the operator
Mediocre performance by the operator


Value Mindset
The two main phases in the lifecycle of a hospitality asset are:
Planning & Development
Commercial Operations
Both phases determine the return on investment and value of the asset.
Ideally, a hotel is developed from the beginning with a strong value mindset. This helps avoiding excessive investment into non-revenue generating areas (back-of-the-house) and commercial parts which yield low returns. A value mindset also ensures that value-engineering exercises do not harm the future revenue generation capability of the asset. Moreover, it decreases the need for costly changes during the construction period which lead to budget overruns, delays, and dilution of responsibilities

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