A Chapter on Early Studies

 

Since I am writing this book for everyone interested in understanding how a hotel is developed, it is important to begin with a simple clarification: a significant amount of work is completed before an architect sketches the first line on paper.

It is a common misconception that a project begins with the commissioning of a designer. In reality, by the time a consultant sits down to draft the first block plan or calculate a structural grid, the project has already lived an entire life in the boardroom. It has been tested, challenged, and refined through business planning and a relentless evaluation of numbers.

You may have spent years mastering design or engineering, understanding every detail of a building’s physical form. Yet it is worth recognising that the project had a life before it reached you, and it will continue to evolve after your role is complete. Before any physical design begins, these early studies determine whether the project has a reason to exist at all.

A hotel development like other projects passes through several such stages before its “ultimate life” begins—the day the first paying guest arrives. In the built environment, we rely on specialisation, and each of these stages is handled by experts in their respective fields.

Determining the Project Identity

A hotel can be developed by a range of entities—a global hospitality chain, a private group launching its own brand, or an individual investor. Each brings a different perspective to the table. For the purpose of this discussion, it is useful to look at the process from the lens of a real estate developer seeking the most viable business outcome.

Every project begins with an opportunity.

A business entity has earmarked funds for real estate—perhaps for asset diversification, steady income, or long-term capital growth. However, the nature of the development is rarely fixed at the outset. Even if a plot has been acquired with hospitality in mind, important questions remain.

What type of hotel will succeed on this site?
Does the surrounding market support that idea today?
Has the context evolved since the land was first planned?

A development does not exist in isolation. It must respond to its surroundings—what already exists, what is missing, and what is likely to emerge. A successful project finds the right balance between supplementing, complementing, and competing within its immediate hinterland.

Finding that balance is not always straightforward. The most suitable opportunity in the market may not align with personal preference or brand ambition. These are decisions involving significant capital, and they demand a level of objectivity that goes beyond instinct.

This is where specialized advisory firms come in—global consultancies such as EY or KPMG, and real estate specialists like JLL, CBRE, or Knight Frank. Their role is to bring data, experience, and structured analysis into what would otherwise be a highly subjective decision-making process.

Defining the Business Case through H&BU

Success in real estate often comes down to being in the right place at the right time.

There may be a strong personal inclination to build a hotel, but a particular site might be better suited for an office development or a retail complex. The Highest and Best Use (H&BU) study exists to challenge that bias.

It evaluates all legally permissible and physically possible uses of a site and identifies the option that offers the most viable financial outcome. In doing so, it establishes the project’s business case.

This is where the idea begins to take shape—not as a preference, but as a decision backed by analysis.

The H&BU study outlines the value proposition, potential revenue streams, and overall positioning of the development. It provides a structured basis for engaging stakeholders and investors. What may have started as an idea is now supported by data, and begins to move toward something that can be financed and executed.

The Role of the Feasibility Study

If the H&BU study answers the question of what should be built, the feasibility study addresses whether it can be built—and under what conditions.

It takes market insights, development costs, and funding structures to model different financial scenarios. The goal is not just to predict returns, but to understand sensitivities and risks before they materialise on site.

We will not go into the technical details of financial modelling at this stage. What matters here is the outcome.

Together, the H&BU and feasibility studies define a set of operating parameters that guide every decision that follows:

• The maximum investment the project can sustain

• The size of the property and cost per key

• The timeline required to align with market conditions

• The expected Average Daily Rate (ADR)

• The target occupancy needed to service debt and generate returns

These are not abstract numbers. They shape the size of the building, the quality of finishes, the positioning of the brand, and ultimately, the experience delivered to the guest.

Decisions taken at this stage have a long shadow—they influence everything that comes later.

Identifying and Selecting a Hotel Operator

With the business case defined, the next step is to identify the right operator.

At first glance, the number of available brands can feel overwhelming. However, by this stage, the earlier studies have already narrowed the field. They indicate the appropriate market segment—whether the project should be positioned as a luxury, upscale, or midscale property, whether it should cater primarily to business or leisure travellers, and whether an international chain or an independent concept is more suitable.

Even with this clarity, the selection process is far from simple.

A hotel operator is not just a brand name attached to the building. It is a long-term partner whose involvement will extend well beyond construction—often for decades. The decision must therefore go beyond recognition or market presence.

What matters is alignment.

Alignment in operational philosophy, in market positioning, and in long-term objectives for the asset.

Evaluating this requires careful consideration of track record, regional experience, operational capability, and the ability to deliver consistent performance.

Bringing the operator on board at the right time is equally important. Early involvement allows their requirements to be incorporated into the design process, reducing the risk of costly revisions later. Delayed engagement, on the other hand, often results in misalignment between design intent and operational needs.

In a project of this scale, that misalignment is rarely inexpensive.

I can say this from personal experience.

Early in my career, I was the project architect on a hotel project and the site was in the Sultanate of Oman. The client was unable to finalise an operator due to internal organisational challenges. Instead, they appointed an international independent hotel specialist from the Far East to act in that role—someone who would define the brief and guide the design in a way that could later be accepted by any operator.

If I had to describe the outcome of that decision in one word, it would be: disaster.

While the H&BU study may indicate the approximate number of keys at the outset, it is the operator who defines the ‘design-brief’ in detail—room mix, room sizes, suite configurations, lobby scale, restaurant capacities, and the overall operational logic of the building.

Equally important is the Technical Services Agreement (TSA), through which the operator’s technical team reviews the design at every stage, ensuring alignment with brand standards.

Without these two elements in place, the project risks moving forward without a clear reference point. And correcting that later is rarely simple, and almost never inexpensive.

The Power of Benchmarks and Rules of Thumb

By this stage, you may be wondering how one arrives at an approximate cost for a hotel project.

While some initial figures emerge from the H&BU study, they are often presented as a range. The real question then becomes: how do you assess whether those numbers are realistic, and where your project is likely to fall within that range?

This is where benchmarks and rules of thumb become useful.

They provide a quick sense check—testing early assumptions before detailed studies are fully developed. We will look at these in more detail in a later chapter as we get into the practical aspects of feasibility.