Pages: 31

The opening chapter contains a brief overview of the industry, a review of where it’s at, and where it’s going, including areas of opportunity. Coming from another industry, going it alone or executing the relaunch of an existing business are significant undertakings and should not be entered into lightly. The chapter asks readers to consider their aptitude and appetite for what it’s going to take to be successful. This section includes anecdotes about failures, people who succeeded, and the need to see through survivorship bias and our own delusions, as well as exploring, assertiveness, leadership, entrepreneurship, having a plan, finding your genius, removing your limitations, and creative thinking using the right side of the brain and the Disney Creative Framework.

Pages: 4

Chapter 2 provides an introduction to the author’s fundamental principles, the 3Ps of hospitality: Place, Purpose and Profit, where place is the reception of someone at your location (which is why they’re called guests and not customers); purpose is the entertainment of your guests i.e. the purpose of both the customer and the entrepreneur; it’s the customer’s why and the business’ answer to that why; and lastly, profit, the differentiating factor that transforms hospitality from a purely social activity or hobby to a business; one motivation is to make ‘a return on investment’ (which can include non-financial returns, too). It is the commerciality or ‘intending to make a profit’. The intention of making a profit implies ‘a financial gain…the difference between the amount earned and the amount spent in buying, operating, or producing something’. Don’t forget, your time is an investment, not least as it is time forgone that could be used to do something more rewarding.

Pages: 50

Chapter 3 provides an insight into the real estate world or the property side of hospitality. Real estate accounts for approximately 50% of the guest experience of any hospitality business and it’s essential to understand how the property world works. Did you know that the biggest burger franchises make more money from real estate and property development than from flipping burgers? Beyond renting an apartment, many people embarking on a hospitality venture have little experience of leases, how franchises and management agreements work, or why they’re constructed in the way they are. Then there are the unending areas of the law and licences that govern the operation and development of land and businesses. You don’t need to know it all, but you do need to know what questions to ask and when to get professional advice. This section provides an illustration of how big franchises make more money from their real estate operations than their core activity, as well as how yields work in practice.

Pages: 69

Chapter 4: Fifty percent of hospitality is the people and the ‘entertainment’ they offer, which really boils down to the why of what you’re doing and why your guests might care. People tend to come to your business primarily not because of the lower order urges of food, water, shelter, sex and security; they tend to come to fulfil their higher order needs of social interaction and self-actualisation (although primal desires do sometimes play a significant, if subconscious, part in their decision-making, too). Your guests will have varying motives to visit with you and the better you understand them, the better you will be able to provide for and market to them – the cost of acquisition of a new guest is estimated at between 5 and 10 times higher than that of retaining an existing guest. It all begins with establishing an emotional bond with your guests through a correctly aligned brand and marketing plan (including developing a well-thought-through Vision, Mission and set of goals, objectives and values). On a granular level, it also looks at things like interview techniques and how to gather intelligence for your project. There are several sidebar psychology topics covered to illustrate how we tend to use heuristics that can misinform our decision-making…and that we need to get beyond, as well as those that illuminate the perceived irrational nature of human behaviours.

Pages: 45

Chapter 5: Money has an opportunity cost – you can keep it in the bank, invest it in your pension or in a business venture – and it is with this in mind that you must make your choices. The value of your money is also eroded over time, by inflation, which we all understand, but there’s also a risk of it not being there in the future when you want to use it. The greater the risk of it disappearing, the higher the return you would rightly expect to get from it. We put money in the bank at low interest rates or in a pension because we want its value to grow, but more importantly, because we don’t want to lose any amount of it. This is financially the opposite of putting a bet on a longshot at the races, when we weigh the strong possibility of losing our money altogether, against the chance of a big payout if we’re right with our choice. A hospitality investment is this respect is the same as any other and individuals need to understand how financial professionals measure risk and return. They also need to know their own numbers – particularly if they are to convince would-be investors or lenders to take a chance on them before they even start. You don’t need to be a finance director, but you do need to understand how she or he thinks. The chapter includes a case study of a fictitious business with a P&L (trading Profit and Loss account) and a DCF (Discounted Cash Flow), as well as anecdotal commentary on occasions when it went right and when it didn’t.

Pages: 18

In Chapter 6 it’s time to use all of your accumulated knowledge, combine it with your brainwave idea and put down on paper exactly what it is you’re planning to do. You need to specify your project and deploy the ‘six honest serving’ people or the what, why, when, how, where and who? (including the size and scale, who the target audience is and how you’re going to attract them and manage the property). The is an example of how to gather the information from a client and write this up for a market and financial feasibility study.

Pages: 7

In Chapter 7 we look at how most property developers conduct a development appraisal or a market and financial feasibility study, even if it’s just an internal document. They do this to see whether their development is likely to make money or to establish the maximum level of supportable debt i.e. how much they can afford to borrow against how much equity they’re going to have to find to complete the project. Most lenders will also require this kind of document before an officer presents a potential client’s case to their credit committee. We have already considered the marketing plan and financials in previous sections and so this section will give illustrations of data gathering and presentation.

Pages: 9

In Chapter 8 we look at the difference between development management and managing the project, and where the project sponsor sits in the process. On the assumption that the reader is not a project manager and therefore will engage a suitably qualified professional or team, this section will go into less detail on project management, but will provide a summary of different styles and the recommended approach by RIBA (The Royal Institute of British Architects) under their latest plan of works. There is also detail on how to conduct an operator selection process that serves not just as a route map for those intending to use a third-party operator, but also as an aide memoir of the key things a developer looks for, for the reader who wishes to be the an owner–operator or operator themselves.

Pages: 4

Chapter 9 lightly handles the sometimes thorny issue of asset management, with reference to experience running a $3bn portfolio for a large UK bank, from turning a two-page business plan into a formal asset management strategy, the different processes of asset management and techniques for analysing how the business is performing. If you are operating the business yourself, you need to step outside it once in a while and review it as if you weren’t. In this case be your own asset manager. If you have a management company or manager on board running it, then you’ll likely be doing this already. Th secret to asset management is two-fold, 1) have a plan, 2) don’t look for silver bullets to solve all your worries in one swoop – think of yourself as a mad professor tinkering with their contraption, endlessly twiddling knobs and turning dials and fine-tuning the different components. Success is about getting the whole machine to run smoothly, planning the route and adjusting the steering when you hit a bump in the road.

Pages: 3

Chapter 10: After five or ten years of a lifetime, it’s all going well, and the business owner thinks about where their passion truly lies or what to do next. Do they keep going as they are; after all it’s what they love and they’ve proven they’re good at it, or do they sell up, exhausted after a long and gruelling journey? At this point, some of the choices made early on in their voyage begin to crystalise. Did they write a reassignment clause into the lease…can they even sell? Or have you just been adding to the value of someone else’s real estate? Does that profitable management-light structure now suddenly look like a lack of continuity planning – who is going to run the business once they’ve gone? Is the prospective buyer going to pay for the goodwill in the business, if it walks out of the door with you? Are they going to want to put golden handcuffs on to make you stay, at least for a year or two? Would you want to stay after you’ve mentally checked out? What are you going to do once you’ve sold?