<p>In Part 1 of this article, I sought to introduce and outline the first stages  of the life of a hotel - from inception through to opening.&nbsp;My intention was to  present a simple account, for the benefit of hotel developers and owners, of the  hotel development process and to show just how complex this process can be.&nbsp;In  terms of the interaction between owner and operator, the article also sought to  highlight how this relationship works, and how important it is to develop the  relationship at the very earliest stages of the project.&nbsp;<br /><br />Part 2 is the  final part of my article, and follows the process through the construction stage  to fit-out and procurement, appointment of the hotel personnel, pre-opening  activities and finally, to opening.&nbsp;&nbsp;&nbsp;<br /><br /><strong>Construction and  beyond...</strong><br /><br />The nature of the project will dictate what is  required in terms of construction. The process will differ depending on what is  required, i.e. construction of a new hotel, completion of construction of a  partially built hotel, or refurbishment/renovation of an operational  hotel.&nbsp;&nbsp;<br /><br />Renovation/refurbishment of an operational hotel will bring  additional complications and considerations.&nbsp; In most ways, this situation  raises the greatest risk to owner and operator alike, and will require the most  management by all parties to ensure that it is successfully executed with  minimal impact on the operator, guest experience and revenue.&nbsp;<br /><br />Once  schematic design is completed (incorporating the operator&rsquo;s input to ensure  compliance with its brand standards and requirements), the owner can finalise  the pricing and programme.&nbsp; The owner can then also commence the tender process  for appointment of its contractor.&nbsp;<br /><br />The owner&rsquo;s professional consultants  should advise on the type of procurement method best-suited to the project. This  advice will structure the construction process, the team and the type of  construction contracts to be entered into.&nbsp; The owner&rsquo;s consultants will assist  in putting together the tender package and will identify suitably qualified,  experienced and licensed contractors who should be invited to tender for the  construction works.&nbsp;<br /><br />In the event that the project is the completion of a  partially built hotel, it may be that the best advice for the owner is to  re-engage the original contractor for completion of the works.&nbsp; This would be  appropriate where the quality of the work is acceptable and will avoid the need  to find another contractor who is willing to take responsibility (and liability)  for the existing works &ndash; something which is often difficult to achieve and will  come at a cost to the owner in any event.<br /><br />Once the contractor has been  appointed and the project costs and programme set, detailed design of the hotel  can be finalised and fed to the engineer and contractor, and physical  construction may commence (subject to obtaining all necessary  approvals).&nbsp;<br /><br />Throughout the construction process, the operator and the  owner should continue to work together, to ensure that the operator remains  fully involved in the design process, so that each stage of design and  construction can be signed-off by all parties.&nbsp; It is inevitable that issues,  problems and delays will arise at some point, and this is where a cohesive and  communicative relationship between owner, operator, professional team and  contractor will prove to be of benefit.&nbsp; The construction process very rarely  runs smoothly, and it will save time and money in the long term to deal with any  issues quickly and pro-actively.<br /><br />Completion of the detailed design will  also enable the owner to fix specifications of all furniture, fixtures and  fittings, thereby allowing these items to be procured.&nbsp; It is important to get  the timing of this right and to work backwards from the estimated project  completion date, ensuring that items with the longest lead times for order and  delivery can be procured first.&nbsp; In doing so, this should avoid any need to make  late changes to the specifications (which will already have been approved by the  operator and incorporated into the construction costs), as well as avoid  delaying the construction programme and the anticipated hotel opening  date.<br /><br /><strong>Mockup and benchmark rooms</strong><br /><br />Completion of  the detailed design will also allow the creation of a &lsquo;mockup room&rsquo; for each  room type, for inspection and acceptance by the operator.&nbsp; Sign-off of the  mockup room establishes and fixes the design, layout and specification of the  rooms and no further changes should be necessary.&nbsp;<br /><br />Also, during the  construction and fit-out process for the rooms, a &lsquo;benchmark room&rsquo; should be  established for each room type.&nbsp; Whilst the mockup rooms fix design, layout and  specification, the benchmark room fixes quality, actual construction processes  and finished detail of the rooms.&nbsp; This serves as a marker for all those engaged  in the construction, (from the plasterers to the electricians, the plumbers to  the carpenters), and the benchmark room should not be deviated from, either in  process or finishing quality.&nbsp;&nbsp;<br /><br /><strong>Completion</strong><br /><br />Upon  completion of the construction works in accordance with the construction  contract, the owner&rsquo;s engineer will issue a certificate of practice completion.&nbsp;  This is issued subject to a defects liability period (usually of 12 &ndash; 24  months), and any snagging or minor defects will be remedied.&nbsp; The authorities  will also be required to issue a completion certificate, a permanent utilities  connection, and ensure that the building is approved and insured for occupation  following inspection of the works.&nbsp;<br /><br />Completion of the works pursuant to  the construction contract is a major milestone - upon this date, the hotel is  physically handed over by the contractor to the owner and the risk of and  responsibility for the property passes to the owner.&nbsp; The owner will, in turn,  pass the responsibility for management of the hotel to the operator, pursuant to  the terms of the hotel management agreement (and ancillary agreements, as  appropriate).<br /><br /><strong>Pre-Opening<br /><br /></strong>Approximately 12 months  prior to the estimated completion date, the operator must hire the executive  personnel for the hotel.&nbsp; These are the people who will work with the owner to  take the hotel through the pre-opening stages to opening and full operation.&nbsp;  Generally, the hotel general manager, the sales and marketing director and the  financial controller are among the first employees usually hired.&nbsp; The owner  should be entitled to interview candidates proposed by the operator for these  roles and to approve or reject such candidates.<br /><br />The 12 months leading up  to the opening date are busy for the operator &ndash; it is during this time that the  sales and marketing strategy plan for the hotel must be put together, the  pre-opening budget compiled for agreement by the owner, the first annual  operating budget and performance forecast is compiled, cashflow forecasts and  working capital requirements are prepared, and the rank and file hotel staff  employed and trained.&nbsp;&nbsp; It is also an expensive time for the owner, as they will  now start to provide the working capital that the operator requires to implement  all such things.<br /><br />At the same time, the ff&amp;e is being installed at the  hotel and the construction phase is coming to a close.&nbsp; The operator will remain  involved with completion of the hotel fit-out and decoration, protecting its  brand throughout and ensuring compliance with the brand standards.<br /><br />All  the various operational licences must be applied for and obtained, including the  liquor licence (if applicable) and local police/security department clearance in  terms of surveillance and security systems at the hotel.&nbsp; Most of the  operational licences will necessarily be applied for in the name of the owner,  with the operator&rsquo;s assistance.&nbsp; To facilitate this and the management of the  hotel generally, it is usual for the owner to provide the hotel general manager  with a power of attorney.&nbsp;<br /><br />Where a hotel is operated under a management  agreement (which is the most common form of agreement throughout the Middle  East), then usually the owner will be the legal employer and sponsor of the  hotel staff.&nbsp; Therefore, whilst the operator will manage the staff on a day to  day basis, and the staff remuneration and benefits packages will reflect those  implemented by the operator (either on a regional or international basis), the  owner remains legally responsible for the employees, including payment of  salaries and any end-of-service benefits.<br /><br />In terms of marketing and  advertising of the hotel, this period sees a gradual rise in activity, as the  hotel will officially be included in the operator&rsquo;s portfolio and customer  loyalty programmes, and centrally marketed through its international sales  networks for bookings to commence.&nbsp; Closer to the opening date, the hotel will  also be marketed on a local and regional basis and events will be planned for  the opening date.&nbsp; Sometimes, where the operator is comfortable to do so, a  hotel may open on a &lsquo;soft opening&rsquo; basis.&nbsp; This is a period prior to the  official opening date where the hotel may be partially occupied and therefore  not very busy with guests, which allows the staff a period of time to implement  their training on a &lsquo;live&rsquo; basis and to de-bug any problems that may  arise.&nbsp;<br /><br /><strong>The opening date...</strong><br /><br />At some point during  the pre-opening period, the owner and the operator will agree and fix the  official opening date of the hotel.&nbsp;This might be timed to coincide with a  particularly busy period for the tourism industry specific to the location of  the hotel, or with any major conferences, exhibitions or sporting/leisure events  taking place within the vicinity of the hotel.&nbsp;Wherever possible, the intention  should be to maximise the impact of the launch of the hotel and to capitalise on  these events by attracting as many guests as possible.&nbsp;This should allow the  hotel to firmly establish itself and commence development of its reputation and  customer loyalty.&nbsp;&nbsp;<br /><br />Completion of the hotel under the construction  contract will be subject to snagging and rectification of any minor defects, and  the operator will play an important part in logging all the various items with  the owner, which will require such remedy by the owner&rsquo;s contractor over the  next 12 &ndash; 24 months.&nbsp; The operator will want these items to be remedied as  swiftly as possible with as little inconvenience to the hotel operation as  possible.&nbsp; Retention of a percentage of the construction costs from the owner  until all the defects have been remedied also provides the contractor with an  incentive to remedy as soon as possible.&nbsp;<br /><br /><strong>The start of a  beautiful relationship...?</strong><br /><br />On the opening date, the development  process (save for snagging) draws to a close and the operator assumes full  responsibility for operation of the hotel and, hopefully, a return of profit to  the owner.&nbsp;<br /><br />The official launch of the hotel is an exciting time for all  involved.&nbsp; It is the culmination of the hard work and endeavours by many  individuals involved during the time leading up to this event.&nbsp; It may have been  a very stressful or relatively painless process, but however the hotel comes  into being, the road ahead should hopefully be the start of a long, fruitful and  mutually beneficial relationship between owner, operator and of course, the  guest.&nbsp;<br /><br />This article was commissioned and first published in the March  edition of Hotelier Middle East Magazine.<br /><br />Tara Marlow is Head of  Property, Abu Dhabi and Regional Head of Hospitality, at Al Tamimi &amp;  Company.&nbsp; Tara can be contacted on <a href="mailto:t.marlow@tamimi.com">t.marlow@tamimi.com</a>.<br /><br />Al  Tamimi &amp; Company is the largest non-affiliated law firm in the Middle East,  employing more than 170 lawyers, with offices in Abu Dhabi, Dubai, Sharjah,  Jordan, Qatar, Iraq, Saudi Arabia and Kuwait.&nbsp;<br /><br />Al Tamimi &amp; Company is  a full service, commercial law firm, specialising in the following areas: Real  Estate, Hospitality &amp; Leisure, Construction and Engineering, Banking &amp;  Finance, Corporate &amp; Commercial, Litigation, Arbitration and Dispute  Resolution, Intellectual Property, Information Technology and  Telecommunications, Employment, Maritime, Insurance and Aviation.<br /><br />For  further information, visit&nbsp; <a href="http://www.tamimi.com/">www.tamimi.com</a>.</p>
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