Avoiding Common Pitfalls In Hotel Project Development

New York, February 28, 2002 — In its most recent FocusOn report, FocusOn Hotel Project & Development Services, Jones Lang LaSalle Hotels provides a how-to guide to avoid development pitfalls from pre-construction through post-construction for hospitality projects. The report is co-authored with Jones Lang LaSalle's Project and Development Services (PDS) team — a group of 400 professionals that undertakes over 5000 projects annually. Examples of projects include The Four Seasons Hotel in New York, The Diplomat Resort and Spa in Florida and The Residences at the Ritz Carlton Grand Cayman.

Cost overruns and construction delays can easily turn a profitable project into a development nightmare, often losing millions of dollars in the process, stated co-author Gregory Rumpel, Senior Vice President, of Jones Lang LaSalle Hotels. Construction delays are one aspect of the equation. The other side is the lack of understanding and knowledge of the process for obtaining the necessary permits, licenses and certificates to open a hotel. This can lead to costly delays.

The report examines how to future-proof a design so that the property remains competitive, how to get financial and other support from local governments, how to manage a comprehensive quality control program and how to supervise the procurement process. Also highlighted is the importance of ensuring the owner's best interests during a project.

We have been hired for projects where parties other than the owner had been making the decisions and spending money without regard for budgetary considerations, included Christian Charre, Vice President of Jones Lang LaSalle Hotels, who also authored the report. An objective third party with a proactive accounting structure allows the owner to anticipate financial exposure rather than react to situations as they arise.

In 2000, Jones Lang LaSalle was retained by a government approved fiduciary to assist in the completion of the development and pre-opening activities for The Diplomat Resort and Spa mega-resort in South Florida. Originally scheduled to open in mid-2000, the much-delayed project experienced construction cost overruns and was under scrutiny from the U.S. Department of Labor. Jones Lang LaSalle's PDS team and Jones Lang LaSalle Hotels implemented an action plan, budget and schedule for project completion as well as management operator selection. The hotel successfully opened in January 2002.

Jones Lang LaSalle Hotels, based on its experience with hotel development projects, details the following pitfalls within the FocusOn piece:

Pitfall 10 Building A Dream Rather Than A Financial Winner?
Pitfall 9 Having The Wrong Entity Driving The Process–Should It Be The Owner, The Developer Or The Operator?
Pitfall 8 Form At The Expense Of Function!
Pitfall 7 Why Foot The Bill Yourself? — Get Local And Regional Civic Participation!
Pitfall 6 Limited Contractor Accountability–Now That It's Built, Who Is Responsible?
Pitfall 5 Functional Obsolescence–Missing The Trends!
Pitfall 4 Back-Door Procurement–A Friend Of Mine Imports Beautiful Marble!
Pitfall 3 Costs Spiraling Out Of Control–You Need Another Check?
Pitfall 2 Overlooking The Small Details–What Do You Mean We Need A Liquor License?
Pitfall 1 Missing The Deadline–The Guests Are Knocking But Nobody's Home!

As part of its experience, Jones Lang LaSalle Hotels offers recommendations and solutions addressing each of the pitfalls listed above.

Jones Lang LaSalle's Project and Development Services brings a bottom-line business focus to a client's project and property challenges on all project types and industries. With more than 400 professionals based throughout the United States, PDS services include development management, advisory, build-to-suit, interior project management, renovation and rehabilitation, move management, furniture project management, multi-site program management and strategic occupancy planning.

Combined with the hospitality expertise of Jones Lang LaSalle Hotels, Jones Lang LaSalle offers extensive hotel project and development services.

Jones Lang LaSalle Hotels, the world’s leading hotel investment services group, provides clients with value-added investment opportunities and advice. In 2001, its success story includes the sale of 7,972 hotel rooms to the value of US$1.3 billion in 39 cities and advisory expertise on 100,550 rooms to the value of US$26.3 billion across 255 cities. Jones Lang LaSalle Hotels’ services include transactions, mergers and acquisitions, financial advice and capital raising, valuation and appraisal, asset management, strategic planning, operator assessment and selection and industry research. Jones Lang LaSalle (NYSE: JLL) is the world’s leading real estate services and investment management firm, operating across more than 100 key markets on five continents.