Zazen's Services
WHAT WE OFFER
Area, Demographic & Neighborhood Analysis
The area, demographic, and neighborhood analysis evaluates the local economy surrounding the proposed hotel. The area analysis focuses on the social, economic, governmental, and environmental forces that influence the performance and valuation of a hotel property. Demographic information, including population, households, income levels, employment levels, etc., should be reviewed in detail to calculate the number of people and potential customers who live within the local and regional areas.
Site Review
The site review evaluates the subject parcel’s size, access and visibility, topography, availability of utilities, and other site-related attributes necessary for a successful hotel project. The hotel’s proximity to demand generators is an important consideration since hotel guests appreciate convenient access from area highways, employers, and their destinations.
Proposed Development Recommendations and Costs
The consultant will review plans for the facility, the scope of the development and projected costs to make recommendations for the proposed hotel. The scope of recommendations includes the number of guestrooms, number of restaurants and lounges, amount of meeting space, recreational and aquatic features, retail shops, spa and other amenities to include.
Market Analysis
A thorough market analysis of the local and regional hotel market is essential as the projections of financial performance will depend heavily upon the data gathered. The consultant will analyze occupancy, average daily rate (ADR), and revenue per available room (RevPAR) of a market area. A hotel market report from STR and interviews with management of competitive hotels will help the consultant gain a greater understanding of the state of the hotel market. Additionally, the consultant will identify all new hotels that are proposed, under construction, and in development that could compete with the proposed resort project.
Proposed Development Occupancy and Average Daily Rate (ADR)
In estimating the performance of a hotel, the study will project the number of occupied rooms, ADR, and revenue per available room for the proposed hotel property. A detailed supply and demand model that calculates the historical performance of the market and makes projections for the subject property should be presented.
Financial Analysis
The financial analysis estimates a property’s capacity to generate income and makes financial projections for the property. Estimating annual operating results for the subject property involves an analysis of the subject’s scope and characteristics compared with comparable properties and industry standards.
HOTEL FEASIBILITY ANALYSIS
The economic value of a hotel is calculated through a discounted cash flow analysis or a direct capitalization analysis. The discounted cash flow analysis utilizes the property’s projected net income before debt service for a period of 11 years and applies a discount rate and terminal capitalization rate to determine the valuation. The discount rate is the average annual rate of return necessary to attract capital based upon the overall investment characteristics. The terminal capitalization rate is applied to a future year’s net income to calculate a potential sale price for the property in the future.
Comparison of Value Created to Projected Costs
The key component of a feasibility study is to determine if the projected value created as shown from the discounted cash flow analysis equals or exceeds the development cost for the proposed project. A feasibility study should present the projected value created after a detailed analysis of the factors that determine success of the proposed properties. In some cases, detailed costs will not be available, and this conclusion will be determined after the client has cost estimates performed by building contractors and architects. In other cases, the client has estimates of construction costs, and the feasibility study will present these estimates and compare the value created to the development costs to determine if the project is feasible.
Asset Management
Zazen Asset Management conducts detailed reviews of hotel operations to ensure maximization of revenues and minimization of expenses.
● SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis
● Profit & Loss forecasting review
● Personnel Recruitment
● Conclusion(s), strategic recommendation(s)
● Labor management review
● Internal processes, policies, and procedures analysis – establishment of SOP Guidelines
● Marketing, sales, revenue, and distribution management study
Management/Brand Selection & Negotiation
The key to maximizing asset value of a hotel is the selection of an optimal brand and/or operator. The advantages of successful branding are immense, from global marketing coverage to increased in-house efficiencies. Furthermore, under any structure, including a lease, franchise, or management agreement (brand or white label management group), it is imperative that the terms of all agreements be at prevailing market levels. Zazen possesses the required industry knowledge, competence, experience, and contacts to ensure the most appropriate agreement(s) is put in place, at optimal market terms, and within an efficient timeframe.
Due Diligence Services
Zazen Lodging Consultants is highly skilled at analyzing lodging investments through a surgical investigation of a physical asset and/or an operating company. Zazen’s due diligence processes unearth unknown and/or potentially surprising detail(s) which positions would-be investors to either confirm an original LOI offer, renegotiate based on due diligence findings, or cease pursuit of a transaction.
Acquisitions
We undertake market research and financial analysis to evaluate the reasonableness of the operating assumptions and market and financial projections as it relates to the acquisition. Any suggested alternatives or changes to be made to your analysis and evaluation will be included, along with any major risk factors to be considered.
Asset Review
We undertake a critical review of the physical and operational aspects of your asset, along with its competitive market, and then provide some visibility relative to the near term financial operating performance of the asset over the next 2 to 3 years, including any capital expenditure requirements.
Management/Ownership
We evaluate the various development/ownership business platforms available and address which is most appropriate for your situation, including holding period and exit strategy. As part of this effort, we evaluate whether or not your hotel project should be affiliated and managed by a national franchise hotel company or a third-party hotel operator that separately secures a franchise agreement.
Abbreviated Feasibility Studies
We establish market support for your project to include supply and demand estimates, facility recommendations and brand affiliation, and occupancy and revenue projections for the specific project. In addition, we undertake a financial analysis, which will include operating pro-formas, as well as a preliminary valuation estimate.
