How do you compare one hotel against another hotel?

As an investor and a future hotel owner, I would break down the comparison of two hotels along seven key dimensions. Once you have evaluated both properties against this list, you will have an initial idea of which one is better.

1. 
   

   Location: This is cliched, but very important nonetheless. The right location can drive visibility and traffic which means greater business in the future. Make sure you review the current and future POV on the location. For example, you may have great visibility today, but if a new high-rise is planned to be built, then you will lose that visibility in the future.

   
   


2. 
   

   Ratings: Assuming these are existing hotels, try to understand how their customers rate the hotel. Breakdown the ratings to understand at the next level of detail, the key drivers of these ratings. If no formal ratings are available, talk to some customers or staff to get an idea.

   
   


3. 
   

   Healthiness: Evaluate the construction, maintenance and cleanliness of the hotels by careful self-inspection and if needed get professional advice. Take a deeper look as there may be hidden problems lurking in what may look nice and clean from the outside.

   
   


4. 
   

   Staff: Hiring and retaining great staff is challenging. Find out how they feel and whether they believe in the future of the hotel. Sometimes they will tell you more on the other non-salient aspects of the property

   
   


5. 
   

   Amenities: There are certain amenities you can't retrofit easily. For example, ample parking space or large open swimming pools. Look for those and other unique differentiators when you make your decision.

   
   


6. 
   

   Workflow: Assess the work-flow of the hotel for people moving in and out to see if there is enough today or in the future to scale the customer base. Some of this can be handled by remodeling, but you need to factor in those costs

   
   


7. 
   

   Investment: Everything comes at a price. As you compare the two properties, you do need to consider that as well.

   
   

Without covering the ground that the previous answer gave, I would add that there are a few common assets at all businesses share - PEOPLE and CUSTOMERS.

1. 
   

   In a business, your people and the ethos and environment you create will be a massive contributor to your results and your outcome. Culture is a massively important contributor to the success of a business and if you are creating a culture , make sure it is carefully researched and thought about before embarking on your journey. if you are acquiring a hotel, carefully assess the culture , the fit and the quality of the people and make sure that you can mold the existing culture into the one you want. Many company acquisitions for example fail due to incompatible cultures.

   
   


2. 
   

   Customers are ultimately who you are there to serve. Always adopt an "outside -in" approach first and think about the demographics of the constituency you plan to service. This will help you craft the right offering that meets needs and hopefully "delights" your customers. What is the wildest compliment you could be paid by a customer? - maybe aim to deliver that and your occupancy rates will soar!

   
   

good luck

Hotels are classified mostly according to Price tier, Market Location and level of Services.

First, it is important to compare hotels within the same class. It is also important to know the purpose of comparison.

For most common operational comparisons, in most countries, is looking at 'Smith Travel' reports. Popularly known as STAR reports. The report lists various indexes; such as Occupancy Index, ADR Index, RevPAR Index.

Given the hotels being compared are equitable, the most important and quick index is RevPAR (Revenue per Available Room). This indicator shows relative strength of combination of both Occupancy and Average Rate. For example, a hotel with RevPAR index of 125% indicates that hotel's revenue potential to be 25% higher per available room than the average competitor in the competitive set defined in STAR report.

However, please know this is just operational analysis if the purpose is to invest than other indicators, physical condition, brand, market trends, future analysis, financial obligations, employee strength, suitability to investor and many other factor including environmental but not limited to. Ultimate goal of business investment is to earn money and therefore, analysis of post acquisition free cash flow will be very critical.

Since your goal is to own and operate a hotel in future, I strongly suggest keeping a prudent financier (such as bank), who will do more accurate analysis for you in order to safeguard their own investment.

If I could assist more information, please contact.