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Market Study to support Hotel Acquisition Process

The client

A private family fund is looking to diversify its investments by investing in the hotel sector.

The plan is to acquire or develop properties as part of a portfolio of upmarket boutique hotels in various locations, between 30 and 60 rooms, designed by renowned interior architects. Hotel Solutions Partnership was engaged to assist with hotel acquisition advice.


What did Hotel Solutions Partnership achieve for the client?

A report was delivered, detailing the foregoing research together with conclusions on the potential market positioning and economic indicators, including hotel occupancy level, ADR and RevPAR. The recommendations were used to inform the acquisition process and negotiations with the seller.

HSP recommended that in a US-dominated tourist market like Rome, a fledgling hotel management company would benefit from collaborating with an established international hotel company in order to establish itself in the market.

HSP also detailed recommended next steps for this project:

  • Development of Concept plan
  • Investment Appraisal based on a defined concept
  • Negotiations with Branding Partners

Meanwhile, HSP will work closely with the client’s designers to establish a strategic vision for the planned hotel management company for the portfolio of hotels.

Background

A mid-market hotel property in Rome has been identified as a potential asset to acquire as part of the portfolio. The client recognises the potential for redevelopment of the hotel which has a rich history in that it used to be a former Vatican library and subsequently a convent. The property boasts large bedrooms, an internal courtyard and potential for rooftop terraces.

Project objective

The client approached HSP to carry out a market study in order to identify the potential market positioning for the redeveloped hotel.

The client desires

  • To understand the market dynamics in the Rome hotel sector, particularly in the neighbourhood of the identified asset
  • To develop a property with a unique identity, providing a product that is not currently available in Rome and thereby filling a gap in the market
  • To operate a hotel at its optimum level through collaboration with international hotel companies that have an established distribution system

Project scope

HSP proposed to start with a competitive set and market study, involving:-

  • Site visit by the team to view the hotel and visit competitive properties in the area
  • Research on the tourism sector in Rome, including analysis of local and foreign visitor statistics and trends
  • Research into current and latent sources of hotel demand
  • Analysis of hotel performance data for a competitive set of hotels
  • Review of neighbouring hotels, in terms of branding, clientele and market performance
  • Interviews with hotel managers and business development executives of leading hotel brands in Rome
  • Analysis of information supplied by the hotel’s management team
  • Recommendations on the market positioning for the redeveloped boutique hotel
  • Recommendations on potential branding partners
  • Projections of potential occupancy levels, ADR and RevPAR for the redeveloped property.