Top 5 Mistakes Developers Make in New Hotel Projects – And How to Avoid Them
Developing a hotel is a risky endeavor that combines vision, money, and timing. However, even experienced developers often make common mistakes that can derail projects, delay returns, and harm long-term asset value. At Beacon Sky Hospitality, we have spent decades advising hotel investors and owners across Asia and beyond. We have seen first and what works and what doesn’t.
Whether you are planning a boutique retreat in Thailand or a resort destination in India, here are the top 5 mistakes to avoid in your hotel development and how to sidestep them with careful planning.
Mistake #1: Underestimating the Importance of Feasibility Studies
What goes wrong: Many developers start projects based on instinct or personal preference. They choose a site or concept without testing its market potential first. Without understanding key factors like demand patterns, seasonality, competitor performance, and traveller demographics, you risk building the wrong product for the market.
How to avoid it: A thorough feasibility study should be your first step. At Beacon Sky, we look at market conditions, project costs, ADR/RevPAR potential, and future trends. With this information, you can make informed decisions before spending millions on development.
Mistake #2: Designing Without Operational Input
What goes wrong: Architects and designers often create beautiful spaces, but if the design does not support efficient hotel operations, it can lead to high costs, staffing issues, and unhappy guests. Poorly located service areas, oversized public spaces, and materials that require a lot of maintenance can burden your operations from day one.
How to avoid it: Operational planning should start during the concept design phase. Our advisory team makes sure your design balances beauty with function, streamlining back-of-house areas, optimizing staff flow, and reducing long-term operational costs. This approach also allows for more flexible staffing models, which is especially important in today’s labor-sensitive market.
Mistake #3: Picking the Wrong Brand or Operator
What goes wrong: Choosing a large hotel brand doesn’t ensure success. Developers often partner with a well-known operator without checking if it suits their property, budget, or target market. High management fees and strict brand standards can reduce owner returns
How to avoid it: Use a brand or operator selection process that focuses on financial modelling, target market fit, and brand strength. Sometimes, an independent or white-label approach, like our own Sky Hotel Management, provides better profitability and flexibility, especially in emerging destinations or niche markets.
Mistake #4: Treating Sustainability as an Afterthought
What goes wrong: A lot of developers ignore or put off making ESG (Environmental, Social, Governance) decisions until the very end of the design process. However, retrofitting sustainability is often less successful and more expensive. Even worse, neglecting sustainability can damage your brand and make you less appealing to today's eco-aware investors and tourists.
How to avoid it: Make sustainability a priority right away. We assist in incorporating ESG considerations into master planning, including waste management, water use, energy systems, local materials, and wellness programs. In addition to being the moral thing to do, it also reduces expenses and raises the value of assets over the long run.
Mistake #5: Neglecting Post-Opening Oversight
What goes wrong: After a hotel opens, far too many developers think it's "complete." Minor problems can escalate into significant financial drains if performance is not continuously monitored. ROI can be lowered annually by underperforming management teams, missed revenue opportunities, and inadequate cost controls.
How to avoid it: Put in place an asset management plan that is owner-focused. At Beacon Sky, we examine operator reports, monitor key performance indicators (GOP, NOI, RevPAR, etc.), and pinpoint areas in need of development. This strategy holds your management team responsible and your investment on course.
Bonus Tip: Don’t Underestimate Local Context
Developers occasionally use "copy-paste" models from other nations when they enter new markets, particularly in Southeast Asia. What is effective in Bali might not be in Cambodia or Laos. Knowing the local environment is crucial for everything from labour laws to permits to cultural preferences.
We offer market-specific advice to ensure that your hotel is suited to the particular requirements of the local audience and operating environment in addition to international trends.
How to Get It Right From Day One
Steering clear of these pitfalls can be the difference between a poorly performing hotel and a market leading hotel. Hotel development isn't just about good design or picking a name brand, its about building a financially viable, operationally feasible, market appropriate asset. At Beacon Sky Hospitality we work with hotel owners and developing hotels from feasibility and planning to operations and asset optimization. Utilizing our extensive regional experience and ownership perspective we recommend solutions to help you make informed decisions that will pay dividends well into the future.
Planning a hotel or resort project?
Let’s talk about how we can help. Contact us today to explore tailored consulting solutions for your hospitality development.