Incentivizing Hotel Development – Consider the Possibilities & Profit Potential


Calculating the best timing for important hospitality decisions – as well as the best partners – is an art. Is it time to revamp the décor of accommodations? Do we now upgrade amenities and food and beverage offerings? But, what about the larger picture, where it all gets started – the hotel itself. Do we break ground in this market? Do we obtain a brand flag, and if so, who?

Development incentives are a powerful motivator to drive growth and profitability. They inspire innovative thinking and encourage financiers to penetrate markets. Tapping incentives from a hotel company revered for its business acumen and outstanding customer service levels adds a fierce competitive edge in top destinations.  

Converting, repositioning and new-builds all require risk – but well-conceived strategic risk backed by a partner willing to invest time, effort and resources into a hospitality real estate project can firmly put a hotel on the path to financial success. Establishing solid footing in a market requires developers to review opportunities that will give a hotel that distinctive advantage. Here are the top five reasons now is an ideal time to leverage development incentives in the hospitality space.


#1 Branch Out Into New Horizons

Remaining fresh and relevant to guests – while achieving profitability year after year – guides many of the tactical decisions made by today’s hoteliers. Development incentives encourage owners and investors to branch out from where they’ve comfortably lived, exploring opportunities for repositioning or converting a property in order to strengthen its market presence.

How has a market changed over time? Is a hotel keeping up with the market’s evolution? Hotel companies are increasingly recognizing the power of offering the right incentives to inspire developers to take the next step and reimagine the possibilities of breathing new life into a property, such as changing a flag or retaining independence while aligning with a soft brand.

Once that hotel has been revitalized or introduced in a new market, it wows its valued guests with an exceptional experience that drives loyalty and positively impacts the bottom line. Although obstacles abound in every business, knowing who to tap the right opportunities with is crucial, and incentives play a key role in moving development forward.


#2 Expand Your Geographic Map

Developers continue to explore the best space to break ground for a new property, but often market conditions and finances impede expansion.

Driving the cycle of growth and development, incentives help diminish barriers to entry in certain markets that developers might not have previously considered. They provide that extra push investors need to more confidently expand their asset map in top and emerging destinations and fuel profitability.

It’s crucial for hotel operators to explore the multitude of available incentive opportunities as new companies continue to add themselves to the mix, keeping the playing field ripe with potential. For example, Best Western can now invest in hotels, bringing their balance sheet to the table and offering equity assistance for property development.


#3 Consider Buying And Building Options


To buy or to build? That is the question for hospitality developers.

The multitude of incentives in the market presents an excellent research opportunity for developers to determine if this is the time to proceed with new construction or repurpose existing hotels with good bones in order to reduce building costs. Different incentives coupled with other considerations – do you want to re-flag, is this the right market in which to break ground – might sway the decision, but exploring the prospects is ripe with potential.

Since Best Western can now invest in and build hotels, they can unveil new brands quicker, such as mid-scale GLō℠ and Vīb®, in top markets, where a smaller footprint and less extensive facilities means lower overall construction costs and higher profit margins.


#4 Like-Minded Partnerships Can Foster Growth

The company a hotel keeps can make a huge difference on the lucrative level. A shared philosophy among hotel managers, owners and financiers – encompassing operations, human capital and delivery of the guest experience – produces a seamlessly run, stronger and likely wealthier, more sustainable asset.

Finding the right partners produces a firm competitive advantage. Hoteliers and financiers can be inspired by development incentives from a brand that speaks their same language about how to develop, design and manage a property. Incentives from a like-minded company become an essential motivating factor when financiers are considering who to partner with on breaking ground for a new hotel.


#5 Plan For The Future

The law of gravity unequivocally applies in hospitality – what goes up, must come down. Market downturns are inevitable, and smart, strategic-minded hoteliers are leveraging the profit-yielding potential of incentives to plan for a property’s future.

Thinking ahead pays off. Cash infusions from hospitality partners can bolster the quality of a hotel, including upgraded facilities, increased offerings and better staff training, so that it can sustain itself against the competition. Thinking ahead also inspires a combination of developer introspection and innovation. Fully embrace what matters most to hotel guests and consider creative ways to fulfill those desires in order to cultivate customer satisfaction and loyalty.

Incentives strengthen a property, giving it the much-needed robust backbone to ride the waves of industry highs and lows and maintain an attractive price point.

Achieving customer loyalty is a chief priority for anyone invested in the hotel space – from the moment the idea of the hotel is conceived through the day-to-day operations of every department. Tapping the potential of the right development partner plays a crucial role in maximizing an asset’s capital value. Harnessing development incentives can put a hotel on the path to capture guests for life – and the time is always right to make that move forward.


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