Glossary of Key Terms
A
An area of the hotel that is not in use by the property nor accessible to the guest and typically would require an investment of capital to bring back into use.
The belief that there is more than enough for everyone (in this case, revenue).
Resulting in actions to pursue and capture as much of said thing as possible, in the belief that supply will never be exhausted.
(1) The process of recording and reporting business activities to provide insight as to the hotel's financial status.
(2) In general, the process of recording financial transactions to measure, summarize, and analyze all transactions. Also referred to as Financial Reporting.
[in the context of the behavior of players in the capital stack] A person or firm that will have direct decision-making authority in engagement activities.
An active participant is usually a firm that is spearheading the project and will vary based on ownership structure or Hospitality Capital Project type.
The purchase of a hotel asset by an ownership entity.
See also transaction.
An item of scope that the owner or decision-maker may procure depending on the cost of the good or service.
If the add-alternate is accepted during the bidding process, its cost is typically added to the base bid contract.
The design of a hotel's space with the intent to be visually attractive.
The arrangement of items or principles in the correct or appropriate relative positions.
An item of scope that the owner may pursue in lieu of the original specified base scope.
A product that is priced separately and may or may not be included in the contract.
An alternate product is usually presented due to a benefit in either pricing to procure or from a schedule/sourcing benefit or the owner would like to price the alternate for potential inclusion depending on the price of the alternate and the price of the overall proposal compared to the forecasted budget. The alternate product thus provides an option for the ownership entity and the project team to consider. An accepted Alternate is referred to as an Add Alt.
A supplier or vendor whose good or service is not included in the specifications or solicited as part of the original bid process.
A good or service in the guestroom available to a guest for convenience and comfort, such as a coffee maker, snack bar, mini-bar, or bottled water.
The list of goods and services intended to increase guest enjoyment and comfort that the hotel markets to a potential guest.
The amenity offering highlights amenity spaces as well as services and is used to promote business and make a positive impression on a potential guest.
An area designed to provide comfort and enjoyment for guests that includes but is not limited to swimming pools, firepits, and lounges.
The Americans with Disabilities Act (ADA) is a civil rights law that prohibits discrimination based on disability and establishes guidelines for design and construction to ensure equal access to the built environment for people with disabilities.
The ADA requirements are enforced with the aim at ensuring equal access to all spaces, including but not limited to, amenity spaces and guestrooms of different types (e.g., King, Double Queen, Double) for all potential guests, regardless of any physical constraints or disabilities.
A professional who will provide input regarding an asset’s current level of ADA compliance, as well as outlining what is required to remedy any deficiencies.
One of the largest investment conferences for the hospitality industry.
Typically, the conference is held at the Ritz/J.W. Marriott at LA Live in Los Angeles, CA, towards the end of January. Attendance to the event provides access to compelling content and top-tier delegates, as well as great networking opportunities.
The period of time that represents a transition from one quadrant to the next.
Arc positioning and length (duration of time) are speculative, non-specific, and subjective.
A licensed and trained professional who designs and provides aesthetic and technical advice for built objects and structures.
The architect for a project who submits plans and drawings for permit acquisition with the local jurisdiction.
The AOR is responsible for drawing accuracy and code compliance and their personal name and license number appear directly on the drawing set.
A grouped category of the following professional service disciplines: architecture, engineering, and construction.
In the case of the hospitality vertical, interior design firms (often exclusive of architecture) are also included in this grouping or category.
A professional services firm that provides consulting for architecture, engineering, and construction-related scope of work.
During the due-diligence phase of an acquisition, this type of firm develops Property Condition Assessments (or Report) (PCA/R) as well as Facility Condition Assessments (FCA). This firm may also provide accessibility reports, provide expert testimony, and investigative work to facilitate the resolution of disputes during or post-construction.
A professional service firm from the following disciplines: architecture, engineering, and construction.
In the case of the hospitality vertical, interior design firms (often exclusive of architecture) are also included in this grouping or category.
A firm responsible for the development of architectural drawings required for a new build development, renovation or reposition.
A revised set of drawings typically submitted by a contractor upon completion of a project.
In the Hospitality Capital Project Industry, these drawings are customarily from the initial development of the hotel as subsequent renovation projects tend to be more Interior Design (ID) driven rather than architectural.
The positive increase in value of an asset over time.
The increase in value may originate from a reduction in supply or increase in demand, and may pertain to the land, the building or structure, and equipment.
The categorization of commercial real estate physical assets where the class is identified by the building’s use.
A hotel is a class of asset due to the business type, whereas additional asset classes of commercial real estate include, but are not limited to, office, industrial, retail, and residential.
A corporate strategy that focuses on generating revenue primarily from offering services rather than from having brick and mortar assets on the company balance sheet.
E.g., Marriott Worldwide, prior to the 1990s, owned hundreds of hotels and now owns less than a dozen; their revenues come from licensing, operating, and providing technical services.
The anticipated duration for an asset to be held by an ownership entity on their balance sheet, from acquisition, stabilization, through forecasted disposition.
A professional services firm that specializes in the practice of asset management, to ensure that an asset (hotel) reaches its full financial potential, in order to create increased returns and or be sold at the peak of its real estate value.
A professional that specializes in the practice of asset management, which is to ensure that an asset (hotel) reaches its full financial potential to create increased returns and or be sold at the peak of its real estate value.
(1) The financial fund category that pays the operational expenses incurred (i.e., landscaping, elevator maintenance).
(2) In general, financials used for day-to-day operating expenses of a commercial asset.
The positive increase in value of an asset over time.
The increase in value may originate from a reduction in supply or increase in demand and may pertain to the land, the building or structure, and equipment.
An organization with a common interest.
The metric used to indicate the average from all revenues earned from occupied rooms on a given day.
To arrive at an accurate ADR figure, a hotelier looks at the net rooms’ revenue from the sales of guestrooms, divided by the number of guestrooms occupied to generate those revenues.
B
The area of a hotel that is used by operations and typically not seen or accessible to a guest such as kitchens, staff locker rooms, cafeterias, and administrative offices.
A summary statement of assets, liabilities, and equity of a business at a specific point in time.
[in the context of management fees] A fee that is paid by the ownership entity to the operator for services rendered which includes operating and managing the hotel on the owner’s behalf.
A niche category of a hotel, typically with a limited guestroom quantity and with an aesthetic and service that caters to a certain demographic.
Also referred to as Lifestyle Hotel.
See Branding Company.
See Branding Company.
The tendency for a customer to continue consuming with the same brand that originates from a positive previous experience or incentives provided that reinforce the pattern of consumption.
Incentives may include reward points and service upgrades.
The in-brand variations of standards, often also referred to as brand “schemes.”
Many brands offer their standards with a variety of schemes or packages which vary based on location type—coastal vs. downtown urban core, or geographic region—Latin America or Caribbean vs. Europe or Asia.
An updating of brand standards focused primarily on style and aesthetic upgrades that does not make significant or material changes to the overarching concept of the brand.
The details provided by a brand regarding a good to be procured and installed as part of fulfilling the brand standard.
The specification addresses functionality as well as physical characteristics such as aesthetics, size, and weight.
A requirement established by the Branding Company for a specific brand within their portfolio that delivers consistency in terms of aesthetic, service-offering, amenity space, and safety across all hotels that form part of said brand.
A set of requirements established by the Branding Company for a specific brand that aims to deliver consistency in terms of aesthetics, service offering, amenities, and safety across all hotels that form part of said brand.
See Franchised Hotel.
See Franchised Hotel.
A marketing process that aims to differentiate one product or service from another via distinctive design, functions, and features that promise to make an impact on consumers.
A company that offers branding, franchising, and management services to the hospitality industry for a fee.
The branding company establishes the architectural and interior design standards for hotels and reviews any proposed variations of the standard. The branding company also trains property staff on how to deliver the experience that the brand promises to provide for guests. Although there are other large brands in the market, the most prominent branding companies are Marriott International, Hilton Worldwide, Hyatt Hotels Corporation, and Intercontinental Hotels Group (IHG). Also referred to as a Franchise Company, Franchisor, Flag, or Brand.
See Mezzanine Debt.
Amount of funds allotted to complete a project.
The scope of work of a project where the allocated amount of funds is insufficient to cover the cost to perform the scope, requiring more money or resulting in a reduction or elimination of scope items.
The process of confirming a previously developed budget to execute a scope of work.
The document that provides the applicant with the legal authority to complete the intended construction work, issued by the local jurisdiction where the Hospitality Capital Project will be taking place.
The issuance of a building permit is typically made to the ownership entity or the general contractor and subcontractor trades subsequently seek and are issued trade permits. Work that requires a permit typically also requires inspections from the building department or a third-party inspection service provider.
A set of structural or operational machinery and utility equipment in a hotel, from fire and life-safety systems to heating, plumbing, or air-conditioning systems.
A guest whose expenses are paid by a company and can include guestroom rental, meeting space rental, etc.
Also referred to as Corporate Booking.
See Group Hotel.
(1) A hotel’s income lost due to suspension of operation resulting from a Hospitality Capital Project.
(2) An asset’s income lost due to it suspending operation resulting from physical damage or a jurisdictional order requiring the hotel to close or partially close.
The strategy for a hotel to execute in order to achieve its target metrics.
The business plan will cover multiple years and outline strategies for operation, management, finance (with projections), and marketing, as well as the plan for the proposed Hospitality Capital Project (renovation).
Identified consumption pattern resulting from repeated occurrences.
C
The ratio used to estimate the value of a hotel by dividing its Net Operating Income (NOI) by its sales price or value.
Capitalization rates are expressed as a percentage.
A financial sum spent by an ownership entity to maintain a hotel physical asset.
Also referred to as FF&E Reserve.
A project that aims to improve physical aspects of the asset via an upgrade or replacement of items, areas, or systems.
(1) An investment of capital by an ownership entity that aims to upgrade the hotel in terms of the physical real estate, furniture, fixtures, and or equipment to support growth.
(2) The acquisition of long-term assets by a business to support its growth.
The total marketplace for both debt and equity placement for the development or acquisition of hospitality assets.
A person or firm that plays a major role in the development of hotels or Hospitality Capital Projects by providing either debt or equity to a development project.
The totality of capital invested in a hospitality asset, including debt and equity of all kinds and positions.
The process of identifying, qualifying, and refining pursuit strategies to capture (win) a Hospitality Capital Project opportunity.
A furniture piece within the hotel guestroom including the headboards, bureaus, tables, and desks.
A scope of work requiring the liquidation (disposal of) old and procurement and installation of new casegoods.
The amount of cash (and cash equivalents) movements in and out of a business.
[in the context of when a firm is required to engage a subcontractor, vendor, or subconsultant] It is the value or cost of the bid being used as a line item of the entire proposal.
The subcontractor or vendor is not engaged or contracted; however, for the purposes of the proposal, the amount that they submitted as their bid is being “carried” by the proposing firm and is considered sufficient funds to execute the scope of work required.
A certificate issued by a local jurisdictional authority that deems the property or space ready for use or habitable.
The CO is typically issued by a building inspector to indicate that the project meets building-code requirements and complies with the plans and specifications submitted to and approved by the local building and or zoning authority.
The categorization of branded hotels (where non-branded or independent hotels have their own separate segment category).
Segments are grouped primarily according to average guestroom rates. Chain Scale Segments are: Luxury, Upper Upscale, Upscale, Upper Midscale, Midscale, Economy, and Independent.
An amendment to a construction contract that alters the contractor's scope of work, schedule, or price from the original base scope.
The change order is valid when the owner and contractor both agree on terms.
Professionals that design and review construction.
New build developments or the reprogramming of exterior spaces are projects that tend to require more civil engineering input, whereas the renovation of interiors will have more participation from the structural engineer. A Structural Engineer is, first and foremost, a Civil Engineer, and may perform both functions. A Civil Engineer may create drawings and specifications, perform calculations, review work, and write reports, assessments, and evaluations, as well as inspect said work.
A standard and protocol for maintenance and hygiene practices throughout the hotel.
Minimum guidelines are typically set by jurisdictional regulation (e.g., Health Department) and enhanced by the brand or operator.
The completion and delivery of a project or engagement.
The number of proposals submitted compared with the number of deals won.
This ratio analyzes the effectiveness of the sales process.
Closing is the final step of a transaction.
During closing all legal and financial documents are compiled, reviewed, authenticated, and registered with appropriate parties and the property transfers from the seller to the buyer. Also referred to as Closing on the Asset.
A CMBS loan is a financial instrument that is comprised of multiple senior debt mortgages (all collateralized by commercial real estate assets) that are then pooled together with similar loans.
The pooled loans are packaged into bonds, assessed on a risk/reward scale, and are then marketed and sold to investors on the secondary market. CMBS loans have lenient credit requirements to acquire, will typically have fixed-rate terms of 5-, 7-, or 10-years but are the most unforgiving should the borrower go into default.
(1) In hospitality, the actual building or structure, from a hotel guestroom tower to resort, conference center, annex building, lodge, and cabin.
(2) In general, a building or structure used exclusively for business-related activities.
The entirety of economic industry players involved in the development, acquisition, disposition, and or management and operation of commercial real estate assets.
A complete analysis of all competitors and their relative positioning in the marketplace.
A person or firm that is pursuing an engagement or contract that you or your firm is also pursuing, where the common goal cannot be shared.
Also referred to as a Competitor Firm.
A group of hotels that are seen as direct competitors to one another.
The compset hotels will have a significant number of similarities in terms of number of guestrooms, amount of amenity spaces, and positioning along the segment scale that ultimately targets the same, or similar, market of potential guests.
The initial phase in the design process where broad outlines of function and form are presented.
It includes the design of the following concepts: interaction, experience, and process. During this phase, the Design Team attempts to understand and speak to guests’ needs and how to meet those needs with products, services, and processes. Typical deliverables include concept sketches, and or renderings and models of main ideas and concepts. This phase usually requires between 2 to 4 weeks unless the asset in question is highly custom or a lifestyle/boutique hotel, in which case it could take up to 6 weeks or more to complete the conceptual design phase.
A formal gathering of people with a shared interest in a set range of topics, often taking place in a hotel conference room or a conference center.
[in the context of social media and networking sites] Refers to the degree that someone is connected to another member of the social network.
Where 2nd degree connections are connected to a 1st degree connections and 3rd degree connections are connected to a 2nd degree connections.
A person or firm that is a project stakeholder that does not directly impact or influence engagement potential.
However, they can facilitate an introduction to a decision-maker and share information regarding a potential opportunity.
The phase when the Design Team acts as an agent for the owner to coordinate and resolve in-field conflicts due to drawing and existing condition issues and inspects the contractor's work in terms of meeting drawing and design specifications during construction.
The final, complete version of the drawings that typically contains a Cover Sheet listing all considerations: Floor Plans, Interior Details, Elevations, Exterior Details, Foundation Plans, Foundation Details, Upper Floor Framing Plans, Roof Framing Plans, Cross Sections, Structural Details, Electrical Plans, Plumbing Plans, HVAC Mechanical Plans, and Reflective Ceiling Plans.
Also referred to as bid set or permit set.
A short-term, value-add loan, for financing and facilitating a Hospitality Capital Project.
The obtaining of a contract or engagement to deliver a product or service for a Hospitality Capital Project.
The materials a contractor is responsible for sourcing, purchasing, and typically installing for the project.
The contractor would have included the cost of these materials in their RFP submission.
A Hospitality Capital Project that involves changing the use or class of an asset.
E.g., a project whereby an ownership entity acquires an office building and converts it to a hotel.
[in the context of a firm being coordinated by the GC] A project participant, usually a vendor or subcontractor, that is engaged directly by the owner or owner’s representative. However, the scheduling and phasing of the execution of their scope of work are planned and managed by the general contractor.
[in the context of design drawings] A set of drawings that have been cross-referenced and coordinated by the architect, interior designer, MEP engineer, and any other sub-consultants required.
A classification of investment criteria.
In the case of a core investment, the hotel will require minimal effort to meet the requirements of the Property (or Product) Improvement Plan (PIP) and may have already had the PIP pre-emptively performed. Also referred to as Cash-Flowing.
A classification of investment criteria.
In the case of a core plus investment, the hotel will require some capital improvements and perhaps operational changes to meet the requirements of the Property (or Product) Improvement Plan (PIP) and meet the expectation of the business plan.
See Business Booking.
A hotel that is branded and managed by the branding company.
In these instances, the ownership entity not only has a franchise agreement with the brand, but also a Hospitality Management Agreement (HMA).
A systematic approach to estimate the strengths and weaknesses of alternative activities, based on current performance contrasted against future performance, inclusive of costs.
A professional consultancy firm that provides estimating services for Hospitality Capital Projects, with experience detailing all associated costs, including, but not limited to, soft costs, hard costs, and Furniture, Fixtures, & Equipment (FF&E).
Cost-estimating firms are often engaged by ownership entities looking to acquire or build new hotels as well as to perform cost oversight (monitoring) during a project and or conduct forensic cost audits in the event of disputes or cost overruns.
A set of principles or standards by which something is evaluated and ultimately decided upon.
A customer relationship management system typically is a database with features and tools to facilitate the cataloging and classifying of notes and information.
Certain CRM systems also facilitate the scheduling of follow-up activities with prospects and clients.
Regularly patterned event or outcome that occurs in foreseeable intervals.
D
A liability from capital borrowed by one party from another.
Debt in the capital stack is categorized as senior debt, mezzanine, or junior debt based on its position in relation to risk and how it is collateralized. All debt positions in the capital stack are a lower risk than positions in equity and thus benefit from the lower reward.
A firm that contributes either debt or equity to the make-up of the capital stack.
A financial instrument that provides capital to fund a Hospitality Capital Project or acquisition in exchange for fees paid in the form of interest.
A marketplace where one can buy, sell, or trade loans.
Also referred to as Bond Market.
A person or firm that has the authority to engage a firm in a direct or indirect fashion.
A person or firm that has the ultimate authority to engage a firm and sign a contract on behalf of the owner to procure a good or service for the project.
A person or firm that indirectly wields the authority to engage a firm.
They are typically high in the chain of command of the project team and can be above, on par, or below the chain of command with your direct decision-maker.
A perspective built from anecdotal experiences, and in some cases, more strongly based on emotion than on logic.
The process of selecting a course of action among several possible alternative options.
The process by which the decision-maker evaluates a proposing firm’s submission, their value proposition, how it aligns with project needs, and, ultimately, selects a course of action for engagement.
Refers to a factor that generates consumer interest and/or need for lodging services, in the form of guestroom rentals and event space.
The term for a general contractor vacating a construction site of personnel, equipment, and supplies.
Demobilization includes the disassembly, removal, and site cleanup of offices, storage areas, and other facilities that were assembled on the site specifically for the project.
Taking specific action to make a project less susceptible to a negative outcome.
Short collaborative meeting that is process-driven, where owners, their representatives, and the design team develop ideas and concepts and draft a design solution to a posed challenge.
The challenge or obstacle is presented first, which leads to the team developing its own set of assumptions and goals. Charettes are collaborative in nature where discussion, sketching, and comparing the hypotheses of the initial design goals are key.
Follows schematic and conceptual design and involves the outline of agreed-upon design direction into floor plans, elevations, scale of components, and their interaction with spaces’ details that create a relatively comprehensive set of drawings.
Most major design elements are detailed in this phase, with only fine-tuning afterward. The DD phase has a 50% milestone, which is typically where the construction of model rooms occurs, as well as budget validation. Following model room construction and budget validation, the DD phase continues by applying the design across the entirety of the spaces, as well as coordinating various mechanical, electrical, and plumbing drawings and further refining of details, as well as wiring, ductwork, and plumbing details and plans.
The goal of the design of spaces that are developed and communicated by the interior design team, to convey the fundamental, intrinsic requirements of design for a specific project.
A team consisting of the Architect, Interior Designer, Engineer (if necessary), and all sub-consultants as required to complete the set of construction drawings to be issued to the general contractor to bid and execute the project.
(1) A person or firm that identifies an opportunity for new development or acquisition and subsequent Hospitality Capital Project and assembles the necessary stakeholders to implement the project.
(2) A person or firm that creates new products and assets.
The process of improving raw land or existing real estate that encompasses sale of parceled of improved (entitled) land to the renovation, reposition, for the re-lease or re-sale of existing buildings.
A Person or firm that oversees the ownership entity on strategy, and in many instances, supervises the assembly of the project team.
Also referred to as an Owners’ Representative or Owners’ Rep.
A professional consultancy that advises the ownership entity on strategy, and in many instances, supervises the assembly of the project team.
Also referred to as an Owners’ Representative or Owners’ Rep.
[in the context of the engagement process] A project stakeholder directly involved in the decision-making process responsible for engaging a firm.
The process of investigating and identifying relevant information pertaining to an opportunity.
Also referred to as Qualifying.
A tool that facilitates the process of discovery.
Lost revenue that cannot be re-captured that results from having inventory out-of-order due to the execution of a project.
See also Revenue Displacement.
The sale or disposal of a hotel asset, transferring ownership to another party.
Documents that provide a graphic representation of what is to be built in order to implement the business plan.
An assessment of both the physical and operational characteristics of an asset that is a target for acquisition.
The level of interest and seriousness of pursuit will determine which third-party firms are engaged to help in contributing to the assessment.
E
[in the context of the hospitality industry] The economic cycle is the fluctuation of the market between periods of expansion and recession (RevPAR growth and decline).
Typical cycle duration varies between 6-, 8-, and 10- years characterized by both a peak (height of the market) and a trough (bottom of the market).
(1) The reduction of cost resulting from a company having a significant number of hotels in their network that allow for greater efficiency from an increase in production, resulting in cost being spread amongst multiple units.
(2) The result of efficiency from having spread fixed costs across a large number of production units.
The reduction of cost resulting from a company having a significant number of a specific type of hotel in their network that allows for greater efficiency from an increase in specialization.
A drawing that shows the exterior of a building from different sides.
This is a flat drawing that shows what the building will look like upon completion and may include dimensions, doors and windows, finishes, and decks or porches.
An encumbered asset is corporately managed by a flag (e.g., Marriott, Hilton, or Hyatt) and typically has a hospitality management agreement (HMA) that is contracted for a significant duration of time (10, 20, 30 years+) that is also tied to the asset and passed along to the next owner.
These HMAs have significant penalties in place should termination occur prior to the pre-established end date.
A formal agreement or contract.
The success of a Hospitality Capital Project is measured by achieving three key factors: schedule, scope, and price.
Engagement criteria refers to how the decision-maker weighs and rates these factors. There may be additional criteria for selection or engagement, such as firm designations or certifications (i.e., Minority and Women-Owned Business Enterprise [MWBE] participation) and these criteria must be identified, although they are the exception and not the norm. See also Selection Criteria.
The process of selecting a person or firm to provide a good or service among several possible alternative options.
See also Selection Process.
The pattern or habit of hiring and engaging a person or firm based upon a certain criterion from the three main selection criteria (schedule, scope, and price).
The team within a hotel’s property operations staff responsible for the maintenance and operation of a hotel’s physical facilities, equipment, and machinery.
A business that employs engineers and consultants to deliver engineering design services (Civil, structural, MEP).
Engineering firms are typically engaged by architects, general contractors, and or private owners to design or modify buildings, and or parcels of land.
The process whereby an ownership entity seeks the right to develop (or redevelop) a property or asset with government approval for zoning, density, design, use, and occupancy.
The owners’ interest or net value of the asset.
A marketplace where one can buy, sell, or trade shares of a company.
An equity share can be issued in a public or private market. Also referred to as the Stock Market.
(1) A third-party account that secures funds while a transaction or Hospitality Capital Project is in planning and refunds the amount in case of cancellation.
(2) An account where funds are held while two or more other parties conduct a transaction. The account releases the funds once the transaction is completed successfully.
The liquidation or disposition process outlined for an asset once certain returns are achieved or if specific expectations are not met.
(1) The sale or disposition of a hotel by the ownership entity.
2) The process of disposing of a physical real estate asset.
Refers to a branded hotel asset that either loses or abandons their brand or franchise agreement, thus “exiting” the reservation platform or “system.”
A person who has comprehensive and authoritative knowledge in a particular area.
F
A thorough inspection and evaluation of an asset, including, but not limited to, all mechanical building systems (boiler, chiller, fire pump), façade, envelope, and interiors.
The FCA helps determine the value of the assets’ areas and systems along with projected maintenance and or replacement costs.
The percentage of market share a hotel can forecast to capture based upon their compset.
Fair share is calculated by dividing the number of guestrooms at the hotel by the total number of guestrooms in the market offered by the compset.
A privately held ownership structure that manages investments for a wealthy family or an ultra-high net worth (UHNW) individual.
Typically, a family office has over $100 million in investable assets, with a mandate to grow wealth.
Work performed by a general contractor or associated trade that does not comply with the means and methods of installation or application as outlined in either the project specification manual or the manufacturer’s installation instructions and requires repair or replacement in order to perform the desired functions.
A person or firm who reviews, audits, designs, and inspects scopes of work pertaining to all the fire and life safety systems within a hotel.
Area of focus includes, but is not limited to, Passive Fire Protection Systems, Egress Routes, Building Compartmentalization and Fire Ratings, Fire Alarm and Public Address System and its integration with various sub-systems like HVAC Systems, Elevators, Smoke Control Systems, Access Control System, and Audio-Video Systems. An FLS Consultant is typically engaged by a triggering event, usually, a Property (or Product) Improvement Plan (PIP), where an upgrade to the Fire Alarm system may be required.
A business involved in the selling of services and or products for profit.
See Branding Company.
Space within a hotel that is flexible and can easily accommodate and meet the requirements of several different types of demand.
Typically, this space is equipped with a significant technology offering, and with furniture and fixtures that are multi-purpose and moveable by design.
See Food & Beverage Service.
An area within a hotel where food and beverage items are sold.
Also referred to as F&B Space.
The preparation, presentation, and sale of meals, food items, and drinks in hotel amenity spaces and guestrooms.
See Food & Beverage Outlet.
Revenue from the sale of food & beverage items from venues, room service, banquets, and the in-room mini-bar and snack bar.
[in the context of sales and business development] An illustration of potential opportunities (similar to that in the pipeline), but also includes opportunities that a person or firm has been engaged for, as well as a cash-flow projection.
Additionally, the forecast will traditionally include “high-probability” opportunities from the pipeline report so that a person or firm can project probable additional cash flows. The forecast is a forward-looking report.
A legal binding document between the franchisor (i.e., Brand) and the franchisee (i.e., Owner), with detailed specifications of the franchisor's expectations in the franchise business's management.
See Branding Company.
A royalty payment based on the quantity of guestrooms (initial fee) and is collected as a percentage or variable fee on revenues.
A hotel that is branded, thus allowing it to use the name, operating standards, reservation platform, and other systems from the franchisor in exchange for fees.
The franchised hotel commits to certain standards and rules, such as using specific suppliers and committing to a franchisor's audit. Also referred to as branded hotel or branded asset.
A professional consultancy firm whose service offering includes both interior design as well as architecture.
An ownership entity that pools together and consolidates capital from different parties into one structure, called a fund, to pursue acquisition opportunities.
A real estate fund manager develops and raises funds for development into the commercial real estate industry.
They are typically responsible for asset acquisition and management, risk management, and property management. The real estate fund manager has a mandate to acquire, optimize, and dispose of commercial real estate assets.
Furniture, fixtures, and equipment (FF&E) are products found within the interior and exterior areas of a hospitality asset.
FF&E includes casegoods, seating, decorative lighting fixtures, art pieces, and televisions. FF&E contributes a significant amount of cost to the overall development budget; a good rule of thumb is that FF&E costs can represent anywhere between 40% - 60% of the total overall project cost.
The equivalent of an escrow fund where certain amounts are reserved to pay expenses relating to the acquisition and installation of FF&E, the replenishment or refurbishment of FF&E, and the completion of certain work to be performed by the ownership entity.
The amount of the FF&E reserve is usually between 3%-4% of Gross Revenues and is typically spelled out in the Hospitality Management Agreement (HMA), franchise agreement, and recorded and monitored in the senior debt (loan) covenants.
A listing of characteristics that is developed and provided by the interior design team that furniture, fixtures, and equipment items must meet.
The FF&E specifications are used by the project team to ensure the sourcing of appropriate products when soliciting pricing from vendors and suppliers.
G
The costs of a construction project associated with site management, material handling, and project management and not direct costs required for the execution of the construction (materials and labor).
E.g., Parking, Site-Fencing, Office-Trailers, etc.
A firm responsible for providing the construction materials, labor, equipment, and managerial oversight necessary for the construction of the project.
The general contractor hires specialized subcontractors to perform all or portions of the construction work.
A firm responsible for providing the construction materials, labor, equipment, and managerial oversight necessary for the construction of the project.
The general contractor hires specialized subcontractors to perform all or portions of the construction work.
A person or firm who joins with at least one other person or firm to form a business.
The general partner is responsible for the operation of the business which typically involves the execution of the business plan.
A person or firm with a multi-asset class portfolio as opposed to specialist hotel investors.
Established and outlined in the franchise agreement and mutually agreed upon by the branding companies and ownership entities, the branding company agrees to limit the number of additional franchises within a certain geographic area (usually measured in square miles), thus protecting the ownership entity from an additional franchised supply that would compete for demand.
A decision to pursue (Go) or not pursue (No Go) an opportunity following the process of discovery or having been qualified.
A non-repayable fund or product given by one party, typically a government department, to a recipient.
The top line of a hotel’s income statement that represents all income from all sales, including guestroom rentals, amenity space rentals, and F&B sales, with no consideration for expenditures.
See Group Business.
A category of demand that requires a significant number of guestrooms or amenity spaces to fulfill its needs.
Group business manifests in a variety of ways such as conventions, trade shows, and sports tournaments.
A hotel catering to the specific guest demographic of group and business travelers.
This hotel type will have an amenity offering focused on meeting rooms, ballrooms, and a/v equipment. Also referred to as a Business Hotel.
A rating given as the result of direct feedback from a guest’s evaluation of satisfaction with their stay as it relates to the level of service and the state and condition of amenity spaces and facilities.
A room inside a hotel that is designed to be sold and occupied by one or more guests for sleeping purposes.
A Hospitality Capital Project that improves the physical aspects of a hotel guestroom.
A guestroom renovation often includes new furniture, fixtures, and equipment (FF&E) as well as interior finishes such as paint, carpet, tile, and vinyl wall covering.
All income and proceeds from the rental of guestrooms, including the fair market value of any barter received.
See also Room Revenue.
H
The procurement process for general contractors to competitively bid the plans and specifications for a project whereby the lowest qualified bidder typically is awarded the contract.
Defined as construction costs related to the building structure, site, and landscape.
Includes labor and materials required for the execution of the project, contractor overhead and profit, life safety systems and equipment, and HVAC systems.
A high-net-worth individual is an investor holding liquid financial assets with a value greater than US$1 million.
A person or firm that focuses on providing added value, typically in the form of superior service, and will usually have their value proposition focus on scope and or schedule from the selection or engagement criteria as their competitive advantage.
They are typically not as competitive on price due to their overhead and profit structure.
A condition that is usually discoverable only following demolition and is classified as unusual in nature.
This type of condition will differ materially from those ordinarily encountered in the type of construction required resulting in them being more difficult to foresee.
A course of action where an ownership entity will acquire, operate, and dispose of a hotel, where the duration of time between the acquisition and disposition is the holding period.
The forecasted duration of asset ownership prior to the disposition which, in the case of a hold-for-life strategy, is typically a minimum of 20 years and, potentially, is never disposed of.
A commercial real estate physical asset engaging in business in the hospitality industry, typically a hotel.
A project to maintain or improve a hospitality asset that requires the investment of capital.
A Hospitality Capital Project can be new build construction, expansion, renovation, or replacement in nature.
A trade show and conference that connects members of the hospitality design industry over two days of product exploration, education, and networking.
Typically, the trade show is held at the Mandalay Bay in Las Vegas, NV, in May.
An agreement between an ownership entity and a management company outlining roles, responsibilities, expectation of performance, and duration for operating and managing a hotel.
A firm in the hospitality industry responsible for the operation of a hotel by selling products and services to guests while managing internal sales and marketing, engineering, housekeeping, accounting, and maintaining brand and operational standards.
Also referred to as Operator, Management Company, or Third-Party Management Company.
A person or firm that provides a good or service exclusively to the hospitality industry.
The sector of the commercial real estate industry that involves assets that fall under the class of hotels or resorts, along with the people or firms that provide goods and services to said assets.
A vertical market is comprised of a group of companies that are all interconnected around a specific niche. In this case, companies in the hospitality vertical are attuned to this market’s specialized needs and typically do not serve a broader market. Vertical markets have their own set of business standards and have high barriers to entry for new companies. Companies in the hospitality vertical market tend to be small and medium-sized enterprises.
A state-level, hospitality-specific association that provides advocacy, information, recognition, and networking opportunities that benefit lodging industry owners, managers, associates, related businesses, and communities in the state in which they operate.
An agreement between a management company and an ownership entity where the management company becomes responsible for operating and managing the hotel by providing direction, supervision, and expertise.
A person who owns or manages a hotel.
The team responsible for managing the cleanliness, maintenance, and aesthetics of hotel guestrooms and amenity spaces.
See Minimum Acceptable Rate of Return.
I
A specification provided to the project team that is inappropriate for the existing condition of where and or how it is to be installed.
Also referred to as Bad Spec.
A property that is branded and thus “in the system” as forming a part or unit of a group of equally branded hotels.
A fee paid by the ownership entity to the operator for services rendered that exceed predetermined thresholds and are calculated as a percentage from profits.
A person or firm that occupies an advantageous position or place.
The incumbent for a project typically has a long-standing relationship with one or more key decision-makers.
A hotel that is not branded by any of the industry’s brand companies.
[in the context of selection or engagement process] A project stakeholder involved in the decision-making process in terms of firm selection.
Not specifically responsible for engaging a firm; however, they could wield influence in the ultimate selection or engagement.
A person or firm that is a project stakeholder and is regarded as a subject matter expert and or trusted advisor.
While they are not typically direct decision-makers, they may wield influence on engagement.
An ownership structure that pools together funds and invests in a variety of different financial instruments and assets.
The most common institutional investor organizations in the hospitality vertical include mutual funds, ETFs, insurance funds, pension plan funds, investment banks, and hedge funds.
A firm responsible for planning and supervising the design of architectural interiors and furnishings.
A person or firm responsible for planning and supervising the design of architectural interiors and furnishings.
The final appearance of all exposed interior surfaces such as floors, walls, and ceilings.
The quantity of goods available for sale.
Guestrooms or amenity spaces unfit for rental or sale.
(1) A body that provides strategic advice and controls the allocation of investment funds for Hospitality Capital Projects.
(2) A body that governs and oversees an investment plan and strategy and is responsible for all matters related to investment decisions.
A formal gathering of people and firms with a shared interest in development and investments.
All project stakeholders are typically attendees at these conferences or events.
[in the context of hospitality vertical] The categorizing of acquisition opportunities profiling the potential risk and reward for said ventures. Strategies range from conservative to riskier and are as follows: core, core plus, value-add, and opportunistic.
Core In the case of a core investment, the hotel will require minimal effort to meet the requirements of the PIP and may have already had the PIP pre-emptively performed (prior to acquisition). A core acquisition is sometimes also referred to as a cash-flowing acquisition
Core Plus In the case of a core plus investment, the hotel will require some capital improvements and perhaps operational changes to meet the requirements of the PIP and the expectations of the business plan.
Value-Add In the case of a value-add investment, the hotel will require a significant amount of capital improvements and could also include operational and branding changes in order to meet the requirements of the PIP and the expectations of the business plan. Typically, these investments include reflagging or even repositioning the asset. Opportunistic In the case of an opportunistic investment, the hotel will require the most significant capital improvements of all investment criteria classifications and may even be a new development project. Typically, these investments include a repositioning, conversion, and or change of use to meet the requirements of the PIP and the expectations of the business plan.A request to contractors to submit pricing to provide products and or services that form part of a larger project.
An ITB differs from a Request for Proposals (RFP) in that the ITB is typically more weighted on pricing while the RFP is weighted holistically on technical ability to fulfill project requirements as well as pricing. Also referred to as Invitation for Bid (IFB).
A high-value physical real estate asset that is not easily replaced due to extremely high barriers to entry into the market.
J
A business agreement between two or more unrelated parties, creating a business entity, with common shared ownership.
Junior debt is borrowed money not typically collateralized and repayment occurs in lower priority than senior debt.
Due to junior debt being riskier (lack of collateral), it will typically carry higher interest rates than senior debt. Junior debt tends to have shorter amortization terms and moderate interest rates.
Loans that are typically second mortgages and are collateralized by the value of the asset.
Non-mortgage junior loans are referred to as Mezzanine Loans or Conduit Loans and are higher-risk hotel lending arrangements. Mezzanine financing lenders do not offer mortgages collateralized by the asset, but rather by a lien on the ownership entity that possesses the asset.
Refers to project participants who are not adding value to the project itself but are being compensated for their participation, and, as a result, introduce ideas, concepts, and strategies as a means to “justify” their presence as a paid member of the project team.
K
These are opportunities where a person or firm has a long-standing relationship with key decision-makers and is virtually guaranteed to be engaged and or selected on the basis of their relationship.
Competitor firms are brought into the bidding process to help decision-makers establish what true market price is for the goods or services, or from a requirement to obtain three (3) bids; however, there is virtually no true potential to become engaged.
The industry term for a guestroom.
Historically, a guest at a hotel would procure a key at the front desk for the duration of their stay. Now, these physical keys have been replaced with coded cards for security as well as customizable access to certain exclusive areas of hotels (fitness centers, concierge lounges, etc.). The term key is most often used on the development and project side of the industry where acquisitions are discussed on a “cost-per-key” basis. If a brand is subsidizing a Hospitality Capital Project, that is referred to as receiving “key money.”
Money that the branding company contributes to the overall project budget typically in exchange for added scope items to be included by the owner.
A quantifiable and measurable value associated with the determination of success or effectiveness.
L
A project participant firm that provides goods and or services to multiple different sectors such as hospitality, corporate interiors, educational institutions, and places of worship.
Refers to the size and focus of the project participant firm.
A large-scale firm will typically employ more than 250 employees.
A measure of the length of time that elapses between an initiation of a process (usually via issuance of a deposit of purchase order) and the completion of that process (usually delivery of the product to the project site).
For example, a certain flooring tile could have a 10 to 12-week lead time. The client begins the process by making an initial deposit and the suppliers then begin to 1) assemble the inventory (most likely overseas), 2) coordinate Q&A assessments of inventory assembled, 3) package said inventory for shipping to U.S. ports, 4) ship to the U.S. port, clear customs, etc., and 5) ship to jobsite or a local warehouse for storage.
An opportunity where the competitive landscape is level and no one person or firm has an inside track.
All people and or firms providing proposals are on equal footing; and no one person or firm has a long-standing relationship with key decision-makers or the ownership entity.
A person or firm that provides funds to another party with the expectation that said funds will be returned.
A person or firm who holds the lease of a property or space.
Also referred to as a tenant.
A formal letter to a contractor or subcontractor that notifies the recipient of the intent by another party to award a contract or subcontract for a project or scope.
LOIs are typically employed to allow the ordering of long-lead-time items and or so that the recipient may begin their preparation for the project while concurrently negotiating the final contract. Also referred to as Letter of Agreement (LOA) and Notice to Proceed (NTP).
[in the context of levelling proposals] The process where a decision-maker attempts to organize information from various proposals in a uniform fashion to make comparing scope items and associated costs easier.
A strategy to make use of something to achieve or obtain something else.
The LifeCycle refers to a Product (or Property) Improvement Plan (PIP) or a Brand Standard that establishes the time frame for when a hotel must upgrade to certain standards once they have entered the brand system (i.e., a fixed number is established for useful life of a good).
These cycles will vary. I.e., YR 5-7 will have its specific Cycle renovation, typically “softer in scope” than the YR 10-12 Cycle renovation.
(1) A constant improvement process of hotel facilities and assets in order to maintain business revenue.
(2) A process enabling an extension of the assets lifetime.
See Boutique Hotel.
Consultants who plan, review, and coordinate lighting and electrical systems drawings and specifications.
They work collaboratively with a variety of professionals, including interior designers, engineers, architects, and general contractors.
A person or firm who joins with at least one other person or firm who acts as the general partner (GP) to form a business.
The limited partner invests capital in exchange for equity in the partnership but has restricted voting power and is not in responsible for the day-to-day operation nor execution of the business plan.
A professional networking social-media platform.
Agreed upon value or cost that a contractor incurs for each day a project is incomplete past the agreed-upon date of a milestone.
Funds are usually deducted from what the owner owes the contractor for the work and or recuperated from a deductive change order.
A financial terms that contrasts the ratio of debt (the loan) to the value of an asset.
Typically, the LTV represents the ratio of the first mortgage as a percentage of the total appraised value of the asset.
A person or firm that is located within the vicinity of the project, typically within an hour drive.
One of the “big three” US-based hospitality investment conferences.
Over the past 25 years, tens of thousands of hotel owners and executives from around the globe have attended the conference. Well known for its more casual and laid-back approach, the Lodging Conference is typically held during the third week of September in the Phoenix, AZ area.
Long lead time items are those that may potentially delay a construction start date based on the amount of time in weeks to receive the purchased material contrasted against the number of weeks prior to construction start.
The forecasted duration of asset ownership prior to disposition.
In the case of a long-term hold strategy, duration is typically 7-10 years.
Refers to an established track record that a person or firm has with a decision-maker or an ownership entity.
The lowest-priced proposal submitted that has been vetted to ensure the proposal is not omitting any scope items.
A person or firm that focuses on the price criterion of the selection or engagement criteria as their competitive advantage
M
A firm in the hospitality industry responsible for the operation of a hotel, selling products and services to guests, while managing internal, sales and marketing, engineering, housekeeping, accounting departments and maintaining brand and operational standards.
Also referred to as an Operator or Third-Party Management Company.
In the hospitality industry, management fees are categorized as either base fees or incentive fees and are paid by the ownership entity to the management company working on the owner’s behalf.
The term used to describe the agreement arrived upon with corporately managed hotels.
It is the combination of the words management and franchise.
The degree by which between revenue exceeds the cost of a good or service sold.
Margin is typically expressed as a percentage.
The promotion of certain products or services to specific groups of potential consumers.
Information relevant to a company's past and current performance in the marketplace with regards to market penetration and market development.
(1) A decrease in the market share of a hotel typically resulting from new entrants or new trends such as home-sharing and Airbnb’s.
(2) A decrease of a business market share over time.
The professional designation/classification responsible for designing the mechanical, electrical, and plumbing system requirements for a project.
The MEP engineering firm is responsible for designing building systems for new builds and will analyze and evaluate existing building systems (in the case of a renovation project) and develops and designs the plans and specifications for the modification of systems within the overall context of the entire project.
Mezzanine debt is a type of financing that is a hybrid of debt and equity, providing the lender the right to convert the debt to an equity interest in the capital stack in the event of default.
Mezzanine debt tends to have variable amortization terms and high-interest rates. Also referred to as Bridge Financing and Mezzanine Financing.
The forecasted duration of asset ownership prior to disposition.
In the case of a long-term hold strategy, the duration is typically 4 – 6 years.
Specific points along a project's timeline usually earmarked with a deliverable and payment.
A milestone is a checkpoint that identifies when an activity or group of activities has been completed and signifies when a new phase or activity may begin. Also referred to as Project Milestone.
[in the context of pre-acquisition due diligence] The minimum acceptable rate of return is established by assessing the cost of capital, risk, current opportunities expansion, rates of return for similar investments, and other factors.
Also referred to as hurdle rate.
A set of guidelines and minimum standards required to achieve compliance for a product.
Also referred to as Minimum Performance Standard or Performance Spec.
Sample rooms of the intended scope for the entirety of the project.
Typically, ownership will build two or more model rooms to reflect different potential scopes. If the intended renovation will involve a significant amount of work in the bathrooms, including situations where the brand is mandating converting tubs to showers, the King model room will usually have the conversion scope, while the Queen or Double/Double will receive the scope where the tub remains.
The period of time between the end of winter (March) and the beginning of spring (May) for ski-destination markets.
Tourism focuses on the outdoorsmen demographic where dirt path and hiking trail related-activities become the demand drivers for hotels.
N
NAIOP provides advocacy, education, and business opportunities by connecting members in a North American network of the commercial real estate development and investment industry.
A project stakeholder firm that executes projects across the United States and has a large percentage of their overall project volume “out-of-state” from their headquarters.
A national firm may or may not have multiple offices.
The final net income from the operation of a hotel once wages, cost of goods sold, depreciation, and taxes have been deducted from revenue received.
The measurement that facilitates analysis of potential profitability of an acquisition or Hospitality Capital Project.
It is the difference between the present value of cash inflows (revenues) and the present value of cash outflows (expenses) over a period of time.
The entirety of a person or firm’s contacts including family, friends, colleagues, prospects, and clients.
A gathering to facilitate the connection of members, whether they be a person or firm.
An event will typically be organized by an association, have sponsors, and a set attendee list.
Formerly the Network of Executive Women in Hospitality, NEWH is the premier networking association for the hospitality industry, providing scholarships, education, leadership development, recognition of excellence, and business development opportunities.
A new hotel construction project that is developed on a plot of land.
A new company entering a business sector that will be an additional competitor to existing businesses.
Hosted by the NYU School of Professional Studies Jonathan M. Tisch Center of Hospitality, this conference features general sessions and networking events that provide data, analysis, perspectives, and insights.
Typically, the NYU Conference is held at the Marriott Marquis Times Square, in NYC, the second week of June.
The projected or forecasted Average Daily Rate (ADR) that will be achieved post-business plan implementation (i.e., post-Hospitality Capital Project).
(1) A hotel that serves specific demand from guests in a market segment.
(2) A business operating in a specific market segment with a high level of specialization.
A clause or section of a contract between a hotel and a group or guest guaranteeing their ability to stay at the property in an undisturbed state that impacts the construction schedule.
When guests have these agreements in place while a renovation is occurring, the schedule is typically modified to ensure that only certain types of work occur during certain periods of time to ensure the guests are undisturbed and that the hotel is not in breach of contract. (e.g., Demolition of tile and carpet cannot occur between 6 am and 9 am in areas adjacent to guests). Also referred to as Quiet Enjoyment Clause.
A formal letter to the contractor or subcontractor informing them to begin the project as outlined in previous proposal submission, or response to RFP and or ITB.
The NTP will have certain specific elements that are not necessarily present in a Letter of Intent (such as the number of funds allocated to procure certain items by a specific date).
O
The metric to indicate the total number of rooms rented, divided by the total number of rooms in inventory available, expressed as a percentage.
The metric to indicate the total number of rooms rented, divided by the total number of rooms in inventory available, expressed as a percentage.
The process of managing the hotel and conducting all functions as required for the business.
Also referred to as Managing.
The profit from the operation of a hotel once wages, cost of goods sold, and depreciation have been deducted.
Items that are required to facilitate the operation of a hotel and the delivery of service that have a short lifespan and will require frequent replacement.
These items include but are not limited to bed linens, hairdryers, irons, hangers, towels, dishes, and glassware.
A comprehensive guidebook delivered to the property operations team at project close-out that provides information and instructions regarding material, product, and equipment maintenance and cleaning and upkeep.
See Operator.
An entity or management company operating a hotel, as opposed to the hotel owner or project team members.
See also Management Company.
A classification of investment criteria.
In the case of an opportunistic investment, the hotel will require the most significant capital improvements of all investment criteria classifications and may even be a new development project. Typically, these investments include a repositioning, conversion, and or change of use to meet the requirements of the PIP and the expectations of the business plan.
A templated training document or script developed to help identify characteristics for a specific project and to assess the viability of pursuit, increase potential close ratio, and determine avenues to increase the profit margin for services rendered or goods sold.
The loss of potential gain from other alternate projects when one project is pursued over the others.
The non-specific term for the ownership entity that controls the asset and the project; most frequently this firm is an equity player.
A legal entity and business organization that has the title or deed for the asset.
The composition of ownership entities that are investors in branded assets.
The entities are typically categorized as private, public, or institutional. Each category has its strengths and weaknesses; however, institutional, and public investors tend to have the greatest opportunity to deliver scale, which many branding companies seek in order to grow their brand from a distribution standpoint.
The description of a business type as it relates to the structure of equity and capital formation.
Different Entity Structures have different internal departments and hierarchies outlining the rights and duties of parties involved.
An ownership entity where a single person is the exclusive owner of the hospitality asset.
As such, the owner is entitled to keep all profits but is also solely liable for all losses. In this case, the owner also assumes managerial and operational duty for the hotel and does not contract out to a third party for said services.
A PIP that is issued from a request initiated by the current ownership entity of the hotel.
Typically, this type of PIP is requested when the owner is planning to execute a Hospitality Capital Project prior to the hotel’s stated LifeCycle brand-standard or the mandated date, per the franchise agreement.
A person or firm who acts as a liaison between the ownership entity and the project team.
They monitor various aspects of the project, including the review of pay applications, budgets, and schedules of all professionals engaged.
P
A self-contained heating and air conditioning system commonly found in hotel rooms.
An ownership structure where two or more individuals form part of the business and share in the profits as well as in the liabilities.
[in the context of the behavior of players in the capital stack] Refers to a person or firm that will NOT have direct decision-making in engagement.
The debt players are almost always passive, and while there is variance based on the ownership entity structure, passive people and firms are usually NOT spearheading the project.
The peak of the cycle is the point in time where RevPar, ADR, and revenues are at their highest levels.
It is also the last few weeks prior to several key industry economic indicators, such as RevPar and occupancy, begin to fall.
This refers to a deal that no longer makes financial sense. For example, you drive two hours to save $5.00 at the grocery store.
While, in theory, this is a saving, it does not make financial sense because the cost of the fuel combined with the wear and tear on your vehicle costs more than $5.00. It no longer adds up.
A specification (spec) that outlines the operational requirements of a product or good.
A performance specification does not necessarily focus on what the product or good should look like in terms of aesthetics, but rather specifies what the final installed product must be capable of doing. See also Minimum Performance Specification.
The planning of a construction project to occur as a series of sequences, stages, or phases, rather than as one continuous process.
Phasing of construction projects is particularly beneficial when work is required in multiple areas as it allows a project to move forward while other areas are still able to generate revenue undisturbed.
A visual snapshot of where a prospective opportunity is in the sales process.
A sales pipeline illustrates how many RFPs are expected to be received and when and provides key opportunity details obtained through the discovery and qualifying of the opportunity.
A person or firm that contributes debt or equity to the capital stack of a project or asset.
The term used to define multiple assets.
A period of time prior to the act of acquisition.
The phase of a transaction that occurs prior to closing where a potential buyer is investigating and analyzing the viability of an acquisition.
During this phase, the buyer may incur costs from the engagement of consultants such as: AEC consultancy firms to develop a PCA/R, general contracting firms to develop a construction budget, architecture firms to the consultant of a potential change of use.
A supplier that has undergone a thorough background or financial audit based on specific criteria such as annual revenue, location, number of employees, and past performance before bidding on or signing an engagement.
[in the context of pre-acquisition] A budget developed for the acquisition and development team that usually has information sourced by a general contractor, a project management firm or cost-estimating firm, an architect, and, in some cases, a purchasing agent.
It is a high-level budget number, typically developed without the benefit of construction documents outlining the scope, but usually developed using historical data, square-foot pricing, the PIP, and the owner’s input as the narrative for scope. The preliminary budget aims to provide a cost of work for soft costs, hard costs, and FF&E. The preliminary budget is used to make an initial assessment of the viability of a potential acquisition or Hospitality Capital Project.
Refers to the criterion within the main selection or engagement criteria expressed as a dollar value (price or cost) to deliver a good or service required by the project.
A company that has raised funds via the issuance of shares that are not publicly traded on a stock exchange.
A private equity firm has the mandate to deploy capital to generate high yield returns for shareholders.
An ownership structure made up of different partners; the limited partner (LP) and the general partner (GP).
The LP is usually a private equity firm and contributes most of the equity capital while the GP is usually a developer (sole proprietorship, partnership, or other) that contributes less capital but is responsible for finding, structuring, and executing the deal.
A person or firm that invests in a company whose shares are privately held and not traded on the public stock markets.
Patterns of hiring and engaging people or firms based upon a certain criterion from the three selection criteria.
I.e., if the decision-maker has awarded a project to the low-bidder on the past several projects, their procurement tendency is that of valuing the price criterion above all others. Also referred to as Engagement Tendencies.
A report issued by the branding company that is essentially a checklist of tasks (refurbishment, renovation, or replacement) and timelines within which a hotelier must execute said upgrades for the property to be considered in compliance with brand standards, and to remain in the system.
The person or firm responsible for inspecting a hotel to compare its current condition vis-à-vis brand standards and drafting the scope of work required to bring the hotel up to the brand's standards.
A fee charged by a person or firm specially trained in a specific field such as architecture, interior design, and engineering.
Also referred to as a Professional Service Fee.
See Professional Fee.
Measurement or degree of difference between revenue above the cost of a good or service sold.
A financial report that summarizes revenues and expenses incurred during a specified time, typically by fiscal quarter or year.
The statement provides information pertaining to the company or internal division’s ability to generate profit or incur a loss.
An analytical tool that projects the potential financial position of an acquisition or development based upon historical information, operating metrics, and potential costs.
A list of all project milestones, with beginning and ending dates.
The project development schedule outlines all activities, from the engagement of professionals and obtaining entitlements to design development, construction, and project close-out.
A person or firm that oversees all aspects of a project including the planning, design, procurement, construction, and close-out.
Also referred to as Third-Party Project Management Professional.
A professional services firm that oversees all aspects of a project including the planning, design, procurement, construction, and close-out.
A Project Management firm acts as the owner’s agent or representative and ensures that schedule milestones and budgets are met. Also referred to as a Third-Party Project Management Firm.
A person or firm from the list of companies that provide a good or service to the project; however, they are not part of the project team.
This list includes, but is not limited to, the following types of firms: 1) Asset Management; 2) Development Management; 3) Cost Estimating; 4) Management Companies; 5) Branding Companies.
Factors within the main selection or engagement criteria that are of heightened concern or weight.
This occurs due to the impact of either perceived risk or reward, i.e., if a hotel has a renovation that will coincide with a major event such as a Papal visit, presidential inauguration, or Superbowl, the schedule could be a pressure point with the ownership entity wanting to ensure that the new product is available for sale (time to market) or to ensure that all projects are complete and there is no inventory out-of-order (revenue displacement).
A person or firm involved in a project, including those from the capital stack, project team, project participant list, vendor, supplier, and/or service provider.
Consists of professionals from the project management firm, interior design firm, general contracting firm, purchasing agent’s firm, and the architecture firm.
A report developed following a thorough inspection and evaluation of an asset, including but not limited to, all mechanical building systems, façade, envelope, and interior.
It is used to determine the value of an asset’s areas and systems at a specific point in time.
The concept in real estate where a person or firm evaluates the financial potential of different end-uses of an asset or space to determine whether a project is executed and if so, to what extent.
A potential customer who has been qualified as fitting certain criteria and is able to procure from or engage a person or firm based on its product or service offering.
A person or firm with an intention of becoming the owner of an asset or business.
See Public Space.
Public-Private Partnerships are Hospitality Capital Projects where the capital stack consists of public entities such as a city, state, or airport as well as private companies, all contributing equity to the deal.
An area of the hotel accessible to the general public and not exclusive to paying guests that also connects to amenity spaces.
Also referred to as Public Area.
A person or firm that invests in a company whose shares are publicly traded.
The process of the owner (or their representative) walking a renovated space and identifying deficiencies (small or minor required fixes) to be completed in order for the space to be officially closed-out and complete.
An official document committing to pay for the sale of a specific product or service to be delivered in the future.
A professional that sources, competitively bids, and purchases FF&E and OS&E, and then manages delivery from point of origin to the domestic warehouse for the owner.
The PA also frequently coordinates domestic warehousing, logistics, and, in some cases, the installation of the FF&E and OS&E.
The action of attempting to capture (or win) a qualified opportunity.
Pursuit relates to the steps taken in hopes of solidifying an engagement or winning a contract.
The number of resources (human and capital) expended pursuing an opportunity or prospective client.
The plan developed to align a person or firm’s proposal and offering with the engagement tendencies of key decision-makers.
Q
The process of analyzing information obtained through the discovery process.
The qualification process facilitates successful strategy development from understanding engagement tendencies and aims to improve the sales-close ratio.
R
The industry term for the current sales price of a guestroom for one night’s stay.
The net gain or loss of an investment over a specific time period, compared to the initial cost of the investment.
It is typically expressed as a percentage.
An ownership entity structure whose sole purpose is to own physical real estate.
A REIT can be privately held or publicly traded and is limited in what activity it can engage in to generate revenues and profits.
[in the context of a hospitality asset changing brands] A hotel owned and or acquired by an ownership entity that intends to rebrand the asset to attract a different client base.
I.e., a Doubletree by Hilton being acquired and repositioned to a Waldorf Astoria.
A loan replacement process where the first loan is paid off by another loan.
A drawing of a space looking down at the interior ceiling.
The design team produces the RCP to illustrate the ceiling treatment, ceiling grid, and the placement of all light fixtures.
[in the context of a brand refresh] An updating of brand standards that focuses primarily on style and aesthetic upgrades and does not make significant or material changes to the overarching concepts of the brand.
Scale drawings of the proposed design that serve to provide clients with as accurate a picture as possible of how the finished product will look aesthetically so that the ownership entity can approve the design direction or request a change.
Revenue collected from the rental and or leasing of non-guestroom spaces inside the hotel as well as ancillary set-up fees, audio-visual rental fees, surcharges, and service charges.
The revenue collected from tenants in exchange for the use of space.
A Hospitality Capital Project that involves changing the use of the asset or the position on the hospitality segment scale to attract a different demographic or client base.
This type of project also typically involves rebranding.
A document or package of documents that provide details about a project and solicits bidders to submit pricing and company credentials in accordance with the requirements and formats outlined therein.
An online software application that manages bookings and reservations from customers.
It also manages guest’s data to provide insight on their preferences or manage their loyalty rewards. Also referred to as a Reservation System or Booking System.
A document that outlines the different responsibilities to be performed by different project team members.
The responsibility matrix typically focuses on purchasing (furnishing) materials and services and the main categories will be OFCI (Owner Furnished, Contractor Installed) or CFCI (Contractor Furnished, Contractor Installed).
An area within the hotel that facilitates the sale of merchandise or a consumer good or service to potential customers.
The profitability ratio used to evaluate the gain or loss generated from an investment of capital.
It is expressed as a percentage.
A Hospitality Capital Project that tends to be smaller in size and may or may not occur because of a brand standard or requirement.
Usually, this type of project is executed as a strategy to optimize the profitability of a certain area or amenity space.
Revenue that can no longer be captured due to having inventory out-of-order resulting from the project.
The most referred-to metric in the hospitality industry.
RevPAR is calculated by day, week, or month. To determine RevPAR, a hotelier calculates the total revenue derived from room rentals divided by the total number of rooms available during the time.
A system of points that rewards guests that follow certain consumption behavior.
The intent of the reward is to incentivize continued consumption and promote brand loyalty. Also referred to as Loyalty Points.
The term for the implementation of the entirety of a Hospitality Capital Project.
Most often used when comparing the construction of a set of model rooms versus the planned construction or renovation of all the guestrooms. For example, the King room headboards did not fit in the service elevator, the design team needs to look at altering the headboard’s specifications so that this does not become a costly item to install due to logistical challenges during the “roll-out.”
The number of guestrooms available for use and sale to the public on a given day.
The sale or rental of a guestroom to be occupied by one or more guests for sleeping purposes.
Gross revenue obtained from the rental of guestrooms, net of any applicable rebates or discounts such as a reward point redemption and excluding incidentals.
Also referred to as Guestroom Revenue.
Guestrooms that are not included as inventory for sale.
As the project schedule is developed, multiple firms collaborate to develop a forecast of the impact of the project on available inventory (or lack thereof).
This document is referred to as a ROO Matrix or a Rooms-Out Matrix.
[in the context of pre-acquisition] A budget developed for the acquisition and development team that usually has information sourced by a general contractor.
It is a high-level budget number, typically developed without the benefit of construction documents outlining the scope. It is usually developed using historical data and square-foot pricing, but also includes key subcontractor pricing feedback. The PIP, owner’s input, a site visit, and any available PCA/Rs or FCAs are used to develop the scope of work to be priced. In some cases, older drawings or as-builts for the asset are used as the baseline to establish quantities to extrapolate the cost implication for scope. The ROM budget aims to provide a cost of work for hard costs. In the case of a LifeCycle PIP or ROI project, the basis for the development of pricing leans more heavily on actual design documents and less on narrative scopes of work. Following the completion of a 50% DD set, pricing should no longer be considered a ROM.
S
A set of guidelines designed to protect employees and guests in a hotel from hazards and potential health injuries or risks.
The team responsible to maximize a hotel's revenue by strategic promotion of products and services offered to the marketplace.
The belief that there is never enough of something (in this case revenue), resulting in actions to preserve as much of said thing as possible, in fear that the supply will be exhausted.
The criterion within the main selection or engagement criteria that relates to both the overall duration as well as the duration of smaller phases of work proposed, to deliver goods or services required by the project.
The measurement of how closely project participant firms achieve their milestones, fulfilling their projected and scheduled activities.
The extra time incurred beyond the stipulated completion or milestone date in an overall project schedule.
The process of identifying and listing all tasks, activities, and milestones required to complete a scope of work, with planned start and finish dates.
The phase following conceptual design where the team begins to further define some of the major details of the project.
Deliverables associated with this phase include Space Planning, a Reflected Ceiling Plan (RCP), as well as further definition of any major project detail. This phase typically requires between 4 and 6 weeks.
The criterion within the main selection or engagement criteria that relates to the features and functions of goods and or services required to successfully complete the project.
Elements of the scope of work not specifically defined and detailed that the project participant firm should assume will be included as a result of reasoning, evidence, and past performance.
See Scope.
Comprised of services, products, and results that are expected to be provided by the engaged project participant firm.
Engaging in discovery in relation to a person or firm’s competition.
A reference of support, either written or verbal, produced by another person or firm that confirms an original circumstance.
The success of Hospitality Capital Projects is measured by achieving three key factors: schedule, scope, and price.
Selection criteria refers to how the decision-makers weigh and rate the factors. There may be additional criteria for selection or engagement such as firm designations or certifications and these additional criteria must be identified as well, although they are the exception and not the norm. See also Engagement Criteria.
The process of choosing or engaging a firm to provide goods or services among several possible alternative options.
See also Engagement Process.
Senior debt is borrowed money collateralized by an asset and repayment takes precedence over all other debts owed.
Senior debt is issued in the form of a mortgage or a senior note. Senior debt tends to have the longest amortization term and lowest interest rates. Also referred to as a first mortgage.
Hotel loans offered by conventional lenders like banks, savings institutions, or credit unions.
Loan terms can run from 3 to 10 years with amortizations of up to 25 years. These loans are collateralized by the value of the asset (the hotel itself). Also referred to as Mortgage Loans.
Drawings developed for materials to be manufactured and installed that show more detail than the construction documents.
They are developed and drawn to explain the fabrication and or installation of the items to be reviewed and approved by the Design Team and serve as the guide for the contractor's installation crews.
The forecasted duration of asset ownership prior to disposition.
In the case of a short-term hold strategy, duration is typically up to 3 years.
The period of time between early winter (December) and spring (April) when skiing, snowboarding, and other alpine sports are the primary demand drivers for ski-destination markets.
A term used to define a firm’s involvement in a Hospitality Capital Project, “the game,” and incurring the risk, “the skin,” usually in the form of capital for equity.
Refers to the size and focus of the project participant firm.
Small characterizes the size of the firm (fewer than 50 employees). Boutique characterizes specialization in a niche. See also Specialist (Niche) Firm.
A division of CoStar Group that provides market data on the hotel industry worldwide, including supply and demand and market share data.
An independent-like property that forms part of a Brand; however, it is not required to adhere to a strict guideline of brand standards.
These costs consist of services such as interior design work, architectural work, site surveys, civil & environmental assessments and reports, real estate fees, inspection fees, project management fees, and taxes.
A Product (or Property) Improvement Plan that is completed every 5 – 7 years.
An ownership structure where a singular person owns the business and is entitled to keep all profits after tax has been paid but is also solely liable for all debts and losses.
A sovereign wealth fund is a state-owned investment fund that invests capital in real estate and financial assets such as stocks, bonds, real estate, precious metals, or in alternative investments such as a private equity fund or a hedge fund.
Sovereign wealth funds invest globally and mimic the tendencies of institutional investors. Also referred to as sovereign investment fund and state-owned investment fund.
Begins with an in-depth analysis of how the space is to be used.
The Design Team then draws up a plan defining zones, activities, and objects occurring/existing within said zones.
A project participant firm that specializes exclusively in a small segment or sector.
Niche refers to the size of the industry said firm is specializing in. See also Smaller (Boutique) Firm.
Details describing the scope of work, materials to be used, and in some cases, methods of installation for materials and goods required to complete a scope of work.
The reference document that provides a detailed description of the materials to be procured and installed on a Hospitality Capital Project and is also referred to as the spec book.
It is typically prepared by the interior design firm and shared with project participants.
An approved product that has its aesthetic and performance parameters clearly identified and listed (often with a preferred manufacturer’s information) that is provided to the project participants to source and procure for a hospitality capital project.
[in the context of asset acquisition] Refers to the period of time immediately following the official acquisition, at which point the new ownership entity engages their operational team and communicates what the projected business plan will be for the hotel moving forward.
The star report is a benchmarking tool that compares a hotel’s performance against a set of similar hotels and is developed by the hotel management analytics firm Smith Travel Research.
Refers to how your competitor(s) relate to decision-makers involved in the project.
A person or firm with an interest in a hospitality asset or project, be they a player in the capital stack, member of the project team, or from the project participant list.
A tool used by the interior design team to visually express their design intent for an area (typically a guestroom) by presenting colored drawings, swatches of wallcovering, upholstery, and fabrics, as well as carpet, tile, and even samples of wood stains.
The adjustment of your strategy to ensure alignment of your value proposition with project pressure points and the decision-makers’ engagement tendencies.
A person or firm that a general contractor hires to perform specific tasks such as electrical, plumbing, and tile installation as part of an overall project.
Written and or physical information submitted to the design team for approval of equipment, materials, etc., before they are fabricated or procured, to later be delivered and or installed at the project.
A benefit given to a person or business, typically by the government in the form of cash or reduction in liabilities.
A subsidy is often provided to alleviate a burden and or incentivize and promote certain behavior (e.g., investing in green technology).
Small retail shops that sell gifts or amenities that are usually located in or adjacent to lobbies.
An employee of a general contractor whose main duty is to oversee the operations on the construction site and control the short-term schedule.
The superintendent is also responsible for quality control, site safety, and subcontractor coordination.
A strategic planning technique used to identify strengths, weaknesses, opportunities, and threats related to a firm, project, or person.
T
An instance where a person or firm can delay paying taxes to a future point in time.
A mechanism that allows the government to fund private development of emerging and or undeveloped areas that will benefit the whole community through job creation, taxes, etc., by using the projected revenue from any future property taxes.
The delivery of the A&C services is done so for a fee and is referred to as technical services.
A temporary certificate of occupancy is issued at the discretion of a local jurisdictional authority that deems that certain portions of the property or space are sufficiently ready for use or habitable; however, the entirety of the building is not yet complete and full occupancy is not permitted.
The TCO is typically issued by a building inspector to indicate that portions of a project meet building-code requirements and comply with the plans and specifications submitted to and approved by the local building and or zoning authority, and the project owner will have a certain amount of time to complete the remainder of scope required to a full use certificate of occupancy (CO).
The amount of capital an ownership entity contributes to a Hospitality Capital Project that retrofits or renovates a space specifically for a lessee and is outlined in the lease agreement.
The third market classification term, this market type has fewer than 1 million people.
See Project Management Firm.
The overall duration to complete a project, including milestones for smaller phases of work required by the project.
The duration of time it takes from the development of the project concept until its availability for sale or opening.
In most Hospitality Capital Projects, it is the duration from acquisition to re-opening of the hotel operating under the parameters of the new business plan.
An event that facilitates opportunities for a supplier and buyer to meet and exchange information in the hopes of solidifying a transaction.
A trade show will typically have a large exhibition component for vendors along with break-out workshop sessions and, in many cases, keynote speakers and networking events.
The act of exchanging a good or service, between a seller and a buyer.
See also acquisition.
A PIP that is triggered by a change in ownership.
I.e., when a hotel is acquired, the new owner must comply with the required renovation, refurbishment, or replacement of items as outlined in the PIP in order to maintain the brand.
A guest who seeks a short-term hotel stay on short notice (i.e., walk-in guest or last-minute booking).
A real estate asset or property that is in exceptionally high demand by investors.
These assets are typically iconic buildings in prime locations with strong underlying property fundamentals.
The trough is the point of the cycle that marks the end of the period of declining business activity, RevPar, and ADR, and begins the transition to expansion.
It is also the last few weeks prior to several key industry economic indicators, such as RevPar, ADR, and occupancy begin to increase.
A project stakeholder, person, or firm, that an owner relies upon heavily for advice and guidance in the planning and execution of a Hospitality Capital Project.
See Hospitality Management Company.
U
The evaluation of loans that focuses on determining the likelihood that a borrower will re-pay as promised, and that the valuation of the collateral is sufficient in the event of default.
Underwriting involves assessing a value for risk and then calculating a sufficient fee to be charged to justify taking on said risk as a lender.
An area that is used inefficiently and or not being used to its fullest potential.
The oldest and largest association of cross-disciplinary land-use experts worldwide.
Headquartered in Washington D.C, its stated mission is to "shape the future of the built environment."
V
Refers to a classification of investment criteria.
In the case of a value-add investment, the hotel requires a significant amount of capital improvements and could also include operational and branding changes to meet the requirements of the PIP and the expectations of the business plan. Typically, these investments include rebranding, reflagging, or even repositioning the asset.
Products not specified in the scope but proposed by team members who believe said products meet the required performance thresholds at the lowest cost while also meeting the design intent.
See also Alternate Product and Voluntary Alternate.
The value a person or firm promises to deliver to a decision-maker or project should their product or service be procured or engaged.
An HVAC technology that uses refrigerant as the cooling and heating medium.
It has become increasingly popular over the past few years amongst hoteliers for its energy-efficient properties and predictability in terms of the level of comfort for guests.
A message used to exclaim an achievement.
A product that is priced separately and is comprised of different materials or specifications but should still meet the same performance standard and not vary significantly from the designed aesthetic.
An alternate product is usually presented due to a benefit in either pricing to procure or from a schedule and or sourcing benefit. The provision of a voluntary alternate is typically a reaction to a specific call to action within an RFP whereby ownership is asking for input and expertise from the requested team member. See also Value Engineering (VE) Alternate.
W
Created and submitted to the brand when an ownership entity requests a deferral or an exemption with regard to implementing a scope item as required per brand standard.
A comprehensive guidebook delivered to the property operations team at project closeout that provides information regarding material, product, and equipment installed during the project, their intended performance thresholds, and their corresponding warranties with manufacturer and supplier contact information details.
Work performed by a general contractor or associated trade to remedy a situation where an installed item has prematurely ceased performing its function within a certain time frame that varies in length, depending on the jurisdictional requirement and or contract clause.
A training seminar where a participant actively engages in discussion and skill development.
A demographic group whose behaviors are not congruent with the hotel’s service offering and who the hotel is trying to attract.
I.e., during the Great Recession of 2008-2009, many hotels competed to capture market share in a reduced-demand environment and lowered their rates. This resulted in a demographic of guests staying at properties that they previously would not have. Many of said types of guests ended up causing more wear and tear to the asset and the result was increased CapEx spending to maintain and or repair onsite amenities, facilities, and spaces.