Opening a hotel is not only a way to expand your investment portfolio with a prestigious business, but also a real opportunity to influence the region in which this hotel is located. However, every entrepreneur, before starting the construction of a private hotel, is faced with a choice of two options: to build a hotel from scratch or to make a reconstruction of an existing building. So how to build a hotel correctly? In this article, we will look at the facts and practical examples in this topic.
BUILDING FROM SCRATCH
Advantages of building a hotel from scratch:
- Quality. Designing and building a hotel from scratch significantly increases the reliability of its design and internal systems.
- The absence of other people's mistakes. During the construction of the hotel, you will not need to face the correction of other people's mistakes that were made during the construction stage, as during the reconstruction.
- Design costs are lower. This approach provides less cost for the preliminary development of the concept, since it is created from scratch, and does not involve changing the existing structure.
- Compliance with standards. When building a new building, it is more realistic to create it correctly, in accordance with all applicable building codes and regulations, than when reconstructing it
Cons of building from scratch:
- More time to design. The development of the concept can last longer as the building must go through the entire process of designing and validating from scratch.
- The creation period is longer. The total construction period of the hotel may be longer than during the reconstruction of the object.
- Longer payback periods. For objects built from scratch, the payback period is on average 11-15 years.
- Compliance with the local regulations. A hotel must comply with local zoning and construction regulations.
More detailed information on: https://ribashotelsgroup.ua/en/hotel-engineering/
Advantages of reconstruction:
- Convenient location. During the reconstruction, it is possible to place the hotel in a historical building / district.
- Costs and deadlines are lower. The total construction time and cost may be less, since the building is already done.
- Quick payback. With a rational approach, if the correct positioning of the hotel is carried out after the completion of the reconstruction, the payback period can be only 5-8 years.
- The amount of investment is smaller. During the reconstruction, the total cost is reduced by 15-70% compared to the new construction of the same object.
Disadvantages of reconstruction:
- Duration of the project review. ДFor consideration and approval of the project of reconstruction of the object may require more time than for a new building.
- СThe difficulties of choosing the right building. The structure may be completely unsuitable for the superstructure, its foundation and floors will not stand heavy occupancy, it will be impossible to make additional openings in the walls, or all the works will require massive costs and it will be cheaper to demolish it, and build a hotel from scratch on its place.
- Search for financial gain. During the reconstruction, it is necessary to purchase the building at a price that, together with the repair costs, does not exceed the cost of new construction.
- Complexity of compliance with standards. In an existing facility, it is more difficult to implement repairs that will comply with current building codes.
A practical example from the experience of Ribas Hotels Group
According to Artur Lupashko, CEO of Ribas Hotels Group, the reconstruction of an already built facility may incur unplanned costs, as unforeseen circumstances may arise during the repair process. "So, we reconstructed one of our city mini-hotels on the basis of an existing building, which was previously used for warehouses and dry cleaning. We had to cut down the surface layer of the walls, as they were very thick and took up space. We also expanded the staircases, added bathrooms, and other things" he shared.
The construction of a new hotel and the reconstruction of an existing building for a hotel undoubtedly have their pros and cons. Regardless of which option you choose, it is important to remember the main economic rule that the market dictates – the amount of effort invested in exploring and discovering the possibility of expanding your hotel portfolio determines how successful you are.
Starting a hotel is a responsible process that requires knowledge of the hotel business. For the successful organization of construction and the development of the architectural concept and business plan of the project, you should contact professionals.
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