Project Development in the Hospitality Industry

Introduction to the World of Hospitality Development

Trevor Ward, a seasoned expert in the hospitality industry, shares his 48 years of invaluable insights. As the Managing Director of W Hospitality Group; Lagos office and overseer of operations in Istanbul, Ward's journey from a London-based consultant to a pivotal figure in African hospitality is nothing short of inspiring. He offers a rare peek into the worlds of finance and hospitality, in Africa.

Based in Lagos, Nigeria, the W Hospitality Group, under the seasoned leadership of Trevor Ward, has established itself as an "international expert in hospitality," with a footprint in over 90 countries, including 44 in Africa. Renowned for their prowess in feasibility studies, they guide hotel owners and potential investors in maximizing land use. The group, with Ward at the forefront, excels in connecting hotel owners with international or regional operators, skillfully handling negotiations. Beyond this, their services extend to valuations, development representation, and asset management, offering a comprehensive understanding of the complexities of hotel ownership. W Hospitality Group's commitment to the African hotel industry is unwavering, emphasizing education and support in navigating the intricacies of this dynamic sector.

 Understanding Hospitality Giants: Marriott, Radisson Blu, and Lagos Continental

In this blog, several prominent hotels in Nigeria are discussed, highlighting their unique experiences and challenges. The Marriott Ikeja, for instance, was recognized as a great success. Despite this accolade, it wasn't immune to challenges, particularly in terms of prolonged construction times. The exact duration of this delay wasn't specified, but it was hinted that it took longer than initially expected.

Moving over to Victoria Island, the Radisson Blu stands out as a remarkable success story. It achieved a stabilized level of occupancy much quicker than projected, reaching this milestone in just six months compared to the usual three years anticipated in feasibility studies. However, it was not all smooth sailing, as the hotel encountered issues with sewage tanks and odors, which were thankfully resolved eventually.

Interestingly, Sheraton Ikeja has being "phenomenally successful over the years." However, it was also noted that it had its "ups and downs," including "well-publicized problems in the owning company," a situation common to many hotels​.

Lastly, the Lagos Continental Hotel, formerly known as Intercontinental Hotel, experienced significant challenges. There was a notable mismatch in expectations between the hotel's owner and the operator, Intercontinental. The owner's unrealistic expectations led to conflicts, culminating in Intercontinental's exit over unpaid fees amounting to $3 million. This departure had a lasting negative impact on the hotel's occupancy and reputation, taking a considerable time to recover.

Modeling Complexities

Let's dive into, modeling and its issues in the hospitality landscape:

1. Importance of Realistic Expectations: Owners often have unrealistic expectations, which can lead to failures in relationships and projects. This point underlines the need for modelers to understand the practical aspects of project development and maintain realistic expectations​​.
2. Management of Costs: Management companies are responsible for determining and controlling costs. There was a mention of the importance of having controls and budgets in place to manage these costs effectively. The conversation also touched upon the need to adhere to standards in project finance plans, which is crucial for successful project development​​.
3. Stakeholder Considerations in Modeling: The discussion pointed out the necessity of considering various stakeholders in the modeling process. It was noted that different stakeholders have different expectations, and a model should reflect these varying interests, especially in terms of cash flow distribution and revenue allocation to management companies​​.
4. Misunderstanding in Owner-Manager Relationships: The speaker debunked the myth that operators are exploitative, explaining that the owner-manager relationship is often symbiotic. Many conflicts arise from misunderstandings of this relationship. This point underscores the importance of clear communication and understanding in financial models that represent such relationships​​.

Critical Steps in Feasibility: Balancing Design, Costing, and Financial Modeling

During a segment of the webinar, the significance of feasibility studies in hotel design and financial modeling was thoroughly discussed. The conversation was initiated with an example of a hotel project, debating between 90 or 100 rooms, where the architects' design featured a laundry room of only 19 square meters, deemed insufficiently small. This example underscored the vital importance of feasibility studies in the conceptualization of hotel design.

The feasibility studies, conducted alongside concept design and costing, play a crucial role in confirming the practicality and financial viability of the hotel's design. The process often leads to modifications in the original plan; for instance, a 100-room hotel might be redesigned to have 99 rooms due to the building's shape. This meticulous study includes investment appraisal and financial modeling, rooted in design and costing, aiming for cost accuracy within a 10-15% margin of the final expenditure.

Trevor highlighted the superiority of this structured approach to feasibility over rough estimates or guesswork, often referred to colloquially as "a finger in the air". This segment of the webinar effectively illuminated the essential role that feasibility studies play in ensuring the practicality of design and the financial success of hotel projects.

Key Success Factors in Hotel Development
The discussion focused on three key success factors for hotel development. Here's what was said about the first factor:

1. Assembling the Right Professional Team: The complexity inherent in designing, funding, building, and operating a hotel necessitates the need for the right professional team from the beginning. This ensures that all aspects of the hotel, from the back-of-house operations like laundry and kitchen to guest services, function efficiently.
2. Investing Upfront to Save Money in the Long Run: It's crucial to spend more money upfront on elements like energy and water-saving technologies, such as heat exchangers and solar panels. Although these may be more expensive initially, they offer rapid paybacks through cost savings and can enhance the hotel’s appeal to environmentally conscious guests and corporations.
3. Quick Decision-Making by Owners: Owners need to understand the importance of making swift decisions, especially during the construction phase of the hotel. Ensuring that funds are available, and decisions are made promptly is vital to keep the construction team on site and to open the hotel as planned​​.

These points highlighted the importance of proactive and efficient management, especially in the critical stages of construction, to ensure the timely and successful completion of hotel projects​​.

Breaking into the Hospitality Industry
Trevor shared his journey and advice on breaking into the hospitality industry:

1. Starting with a Passion for Hospitality: Trevor initially wanted to be a policeman but couldn't meet the physical requirements, leading him to the hospitality industry, which he grew to love. This highlights the importance of enjoying the work in the hospitality sector.
2. Educational Background and Initial Experience: He pursued hotel management at university, which included a practical year working in the industry. This combination of theoretical knowledge and hands-on experience played a crucial role in his career development.
3. Career Flexibility and Progression: After gaining experience in hotel management, Trevor transitioned into consulting, a field where he has spent 40 years. His story underscores the diverse career paths within the hospitality industry and the potential for upward mobility.
4. Hiring Based on Attitude and Potential: In hospitality, especially for entry-level positions, a positive attitude and the potential to learn are often more valued than extensive experience. Trevor expresses a preference for hiring individuals based on their personality and potential rather than their resumes.
5. Job Opportunities for Varied Skill Levels: The hospitality industry offers opportunities for both skilled and unskilled individuals, providing training and career advancement for those willing to learn and grow within the industry​​.

Trevor's journey illustrated the importance of formal education, practical experience, and a genuine passion for the industry as key elements for those looking to establish a career in hospitality​​.

Partnership Between FMI and dbrownconsulting

In a segment of the webinar, a video of Ian Schnur, Executive Director of the Financial Modeling Institute (FMI, Canada), was played. He revealed a significant partnership with dbrownconsulting, a groundbreaking collaboration initiative to enhance the career prospects of African finance professionals. Under this partnership, dbrownconsulting introduced the Financial Modeling Academy (FMA), a dynamic platform where candidates will be trained in financial modeling and specifically designed to equip them for the FM Advanced Financial Modeler Accreditation exam, marking a pivotal moment in specialized financial modeling education and accreditation for finance professionals in Africa.

About the Program:

• FMA, a collaboration between the Financial Modeling Institute and dbrownconsulting, offers an eight-week program in financial modeling.
• The program covers financial modeling from beginning to end, requiring only basic accounting knowledge, not necessarily a chartered accountant level.
• Participants learn to build three-statement models, and small evaluations, and understand auditing techniques incorporated into models​​.

Assessment and Career Advancement:

• After the course, an assessment is conducted to determine if participants meet the standards to become advanced financial modelers.
• The program aims to enhance careers in finance, help unemployed individuals secure jobs, and enable businesses, like accounting firms, to establish financial modeling departments​​.

Special Offers and Pricing:

• For residents in Africa (excluding South Africa), the program is offered at a special price of $347, which includes the FMA course and exams, originally valued at $2841.00.
• This special program, called Project Africa, is supported by various professional bodies and universities.
• The course includes exam preparation, modeling primers, and access to the financial modeling community for a year​​.

Additional Support and Resources:

• Participants receive access to a mobile app for the course, mentoring sessions, a step-by-step guide for the exam, and mock exams to prepare for the final assessment.
• There is also access to the dbrownconsulting community, Agile Minds, for a year​​.

Future Goals and Registration:

• FMA aims to train one million modelers in Africa over five years, working for companies worldwide.
• The program encourages sponsorship and participation, especially under Project Africa, to meet the growing demand for skilled financial modelers in various industries​​

The Financial Modeling Academy (FMA) Experience

At the end of the webinar an alumnus of the first-ever FMA Cohort held in May 2023; Friday Abisoye, shared his experience with the Financial Modeling (FM) Academy, describing it as exceptional. Here's a summary of what he said:

Friday Abisoye recently shared his journey through the Financial Modeling (FM) Academy, describing his experience as nothing short of exceptional. The FM Academy's unique approach to learning, which involves dividing the curriculum into weekly modules, made it particularly engaging and easy for Friday to follow. This structured approach ensured that each concept was given ample time and focus, contributing significantly to a comprehensive learning experience.

The role of the lead consultant at the academy was a highlight for Friday. He appreciated how the consultant made an effort to break down complex financial concepts, making them more digestible and easier to understand. This personalized attention to detail in teaching methods was instrumental in enhancing his overall learning experience.

Before his enrollment in the FM Academy, Friday had participated in preliminary training and fundamental courses in financial modeling. These initial courses served as a solid foundation, preparing him for the more advanced and intensive curriculum of the Academy. He found these preparatory courses to be very helpful, laying the groundwork for his success in the FM Academy.

The culmination of Friday's training was his preparation for the AFM (Advanced Financial Modeler) exam. The FMA's rigorous training regimen and the practical, step-by-step guide provided by dbrownconsulting were crucial in his preparation for the exam. These resources equipped him with the necessary skills and confidence to excel.

In conclusion, Friday's experience at the FMA exemplifies the effective and comprehensive nature of the program. The combination of a well-structured curriculum, expert guidance, and thorough preparatory training culminated in a rewarding educational journey, fully equipping him for professional success in financial modeling.

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