A boutique real estate firm, we partner

with hotel and resort developers to

deliver alternative real estate products.

Hotel Operator Selection Process Hotel/Resort Asset Class - Management Options

Presented by Mauro Gasparotti

Executive Director

Mauro.gasparotti@alternaty.com

Presentation Outline Hotel Operator Selection

• Players and interests

• Real estate assets vs hotel and resort assets

• Product variety

• Management system

• Operator Selection process

• Operator Selection criterias

2

Players and interest Hotel Operator Selection

End users: Local and International travelers

Value for money, comfort, security, local experience.

Brokers : Travel agent

Client’s positive feedback, sell package tours

Brokers : Online travel agent

Price margin (high commissions)

Developers

ROI,

shorten payback period

Management Companies

Brand expansion, brand enhancement,

management fee

Investors

(operating asset)

Diversification, trophy asset.

Lenders

Secure Investment, collateral

value

Villa and unit owners

Second home use, capital value

Timeshares owner Annual use, exchange programs

3

Real estate vs Hotel/resort assets Hotel Operator Selection

What is the most perishable product in the history of economics?

…A night in a hotel room, which ‘spoils’ immediately if not sold each day.

• More volatile performance as price can vary daily (easy can see a 30% increase y-o-y, but easily can see a 30% decrease y-o-y) and your product is sold daily

• Require a professional management and strong global sale system

• Require architects/designers that understand hotels/resort s(or need management companies involved during design)

• Strong intangible influence, often beyond owner’s control, into the value of the product (for example the visa process can affect the “value perception” of your hotel room)

• High value/ experience transparency (for example trip advisor cruel review test)

• High reliance on third party brokers (travel agent or on line websites) that takes large commission (Agoda can ask as much as 30% of room price)

• High reliance on travel trends

• High reliance on market shock (terrorist attack, climate changes, political turmoil, natural disasters)

4

Large variety of product Hotel Operator Selection

Timesharing

Ninh Van Bay

Condotel

Best Western Nha

Trang

Branded Residence

Hyatt Regency Danang

Freehold Ownership

Ocean Villas Danang

Fractional Ownership

Beach Republic

Koh Samui, Thailand

Leasehold Ownership

The Sanctuary Long Hai

Private Residence & Destination Club

The Ritz-Carlton

Destination Club

Hotel Room

Intercontinental Saigon

TRADITIONAL ALTERNATIVE

5

Integrated in one sole development Hotel Operator Selection

Sheraton

Resort

Townhouse(

residential

for sale)

Timeshare

Fractional

Sales

Golf

For illustration only

6

Management Options

Hotel Operator Selection

Before considering a management company, developers should be aware of all the possible options

and alternatives that match their investment strategy. Do you really need a brand?

Hire operator

Operate

Independent

Franchise

Branded

No branded

Independent

Franchise

7

Why may an international brand be required? Hotel Operator Selection

• Highly competitive marketplace with several similar

product

• Developer seeks to increase rates and occupancy

• Developer seeks to reduce operating costs

• Residential component in need of an identity

• Residential component to increase trust of buyers

• Developer with low experience in the hospitality field

• Developer seeks low or no involvement in daily

operations

• Bank requesting developer to involve a professional

management company

8

Which brand to choose? Accor example Hotel Operator Selection

Design Flexibility

Standardized Brand Design

Economy Luxury

For illustration only

9

Which brand to choose? Marriott example Hotel Operator Selection

Design Flexibility

Standardized Brand Design

Economy Luxury

For illustration only

10

Other options Developers may have not considered

Hotel Operator Selection

• Various Formulas:

Hotel Name managed by Brand Name

Hotel Name powered by Operator Name

“White label” managed by the International Operator

• Manchise Model (Management + Franchise)

• Marketing and Distribution agreement only

• Asset Lease with Profit Sharing

• Asset Lease with Fix Lease

• Management with Guarantee Return

International Operators will typically refuse any of the above, unless not asked extremely politely … this means, Developer need professional consultants and suitable project to persuade operators to accept those options.

11

Operator selection process

Hotel Operator Selection

Stage 1

Understand owner’s

objectives

List suitable

international

management

companies (10-15)

Prepare bidding

documents and

request for EOI

(including client’s

objective)

Collection of EOIs

Stage 2

Shortlist most

suitable options

(3-5)

Collect commercial

terms

Start negotiations of

commercial terms,

key provisions and

performances

Finalize the MOU

Stage 3

Request for HMA,

TSA and pre-

opening agreement

Negotiation for

provisions and key

elements

Finalize the TSA

Finalize the HMA

12

Understanding Owner’s objectives Hotel Operator Selection

A clear understanding of the investment strategy and product is the key for a correct selection of

management option or brand choice.

Operator only Operator - partner

Flexible brand (lower costs) Inflexible brand

Maximise ROI Landmark property

Build and sell Build and hold

and other 100 questions...

Full operator control Full owner control

Without residential With residential

13

• Brand specifications (branding general

guidelines, design and sizes)

• Procurement process and approval

• Indication of construction costs

excluding land per room (if available in

Vietnam, otherwise other countries)

• Performances expectations

• Expected rates (published rate and ADR)

• Competitor positioning

• Marketing and distribution

• GDS systems and loyalty programs

• Typical target market (client by origin)

and expectation for the proposed area.

• Training and pre opening

• Information on the training program for

operating hotels

• Information on the training program for

the pre opening

• General business plan indication,

including the critical success factors for

the proposed brand

• Point of difference to existing brands

• Design and architectures

• Facilities suggested for enhance

performances

• Comments on initial design

• Any other information may be relevant

• Experience in mixed use buildings

• The list could be modified based on the

selection process and information

needed

1st Business Plan: Questions for Operator

Hotel Operator Selection

14

• Owner to approve budgets

• Owner to approve general manager and

financial controller

• Bank accounts to be the property of the owner

• Owner’s right to deal with the hotel

• Restrictions on competitive use of the

operator’s brand name

• Performance criteria

• Asset management

• Opening date and term

• Restrictions on redevelopment

• Fees management

• Fee marketing & maintenance

• Reliance upon forecasts

• Confidentiality clauses

• Third party fees

• Policy approvals

• Shared services and group purchasing

• Branded operator’s equipment

• Replacement reserves

• Independent external auditors

• Insurances

• Arbitration

• Indemnities

• The technical services agreement

• Pre-opening period

• Supervision and control

• Credit of patrons

• Repairs

• Review hotel position

• Trademark licence

• Use of the brand name

• Restrictions on the operator

Major Points of Negotiation in HMA Hotel Operator Selection

15

Hotel developer vs the rest of the world Hotel Operator Selection

Higher Investment Amount

Lower Investment Amount

• Hotel Operator

• Architects

• Master planners

• Interior Designers

• Villa/Unit Buyers

• Local authorities

• Suppliers

• Competitions

• Bank Interest

• Developer

16

About Alternaty

Alternaty is a boutique real estate firm providing

a suite of consulting services throughout the

development lifecycle. Headquarter in HCMC

Vietnam, with associates in Thailand, Myanmar

Indonesia and the Maldives.

Our team has 17 years of combined experience in

the real estate industry with an extensive track

record in hotel and resort advisory in Indochina

Region

More than 40 hotel and resort valuations in

Vietnam, Lao and Cambodia.

More than 35 feasibility and market studies.

12 Operator selection advisory assignments.

Vast experience in mixed used residential

resorts, rental pool structure and fractional

ownership.

Alternaty Alternative Real Estate

18

How Can We Help You? About Alternaty

• We are a real estate consulting firm providing specialist advice for real estate developers and investors.

• Our approach is to forge partnerships with developers to provide a suite of consulting services including market

research, development advisory, feasibly study and highest and best use analysis.

• We specialise in the early stages of planning and development when accurate and detailed advisory adds significant

value for the whole development and maximises the returns for developers, investors or any players involved

throughout the development process.

Investment

Services

Hotel Operator

Selection

Villa

Management

Hotel

Pre-opening

Services

Hotel

Operations

Review

19

The Various Stages of the Property Lifecycle

Our scope of services

Land Planning

Market research

Feasibility study

Valuation

Hotel operator

selection

Development

recommendations

Highest and best use

analysis

Due diligence

Investment

Construction

Design review (from

operation stand point)

Pre-opening budget

Interior design review

(from operation stand

point)

Facilities review

Positioning and

branding identity

(operation stand point)

Operator and

consultant selection

Organization chart

review

Pre-opening

Interim GM service

(pre-opening GM)

Sale and marketing

review

Tailoring of hotel

standard operating

procedures (SOP)

Hiring and training

Pre-opening check

list review and

implementation

Operation

Owner representation

service

Periodic operational

review and critical

points analysis

Training program

Sales and marketing

review

Budget control and

targets

Online reputation

control and review

Upgrade

Reposition

Hotel operations

review

Inspection and

operational analysis

Service upgrade

implementation and

training

Mystery guest service

At any stage of the development process, hotel owners can benefit from professional advice.

20

Our Scope of Services About Alternaty

• A boutique real estate firm providing a suite of consulting services throughout the development lifecycle.

Investment

Services

Feasibility study

Cash flow modelling

Highest and best

use analysis

Development

recommendations

Valuation

Sales & Marketing

Exit strategy

execution

Alternative Real

Estate

Hotel Operator

Selection

Understanding the

Client’s objectives

Consideration of

management options

Preparation of

biddings documents

Collection of EOIs

Comparison matrix of

candidates

Shortlist of suitable

options

Negotiation of

commercial terms of

MOU, TSA and HMA

Villa

Management

Resort style

management of

second home

projects

Website bookings

and reservation

engine

Villa Brand

Standards

Standard Operating

Procedures

Butler Services

Hotel Pre-

opening Services

Functionality &

Facilities Review

Branding and

Service Concept

Hotel operation

forms & tailored

amenities list

Organization chart

and staff positioning

Hiring and training

Tailoring of hotel

standard operating

procedures (SOP)

Hotel Operations

Review

Tailored monitor of

hotel performance

Inspection &

operational analysis

Full operational

review of each

department

Departmental

recommendations

Implementation of

Standard Operation

Procedures (SOP)

Monthly Supervision

21

Annex

Alternaty Hotels + Resorts Newsletter Annex

• Each edition of the Alternaty Hotels + Resorts Newsletter features a certain Real Estate Market and has the following

international coverage

• Sent to more than 10,000 active real estate players in Asia Pacific

• Campaign Monitor software used to track feedback of recipients

• Use of Social Media Channels including Slide Share, LinkedIn, Facebook, Website Blog)

• The Newsletter generally contains the following

topics:

• Real Estate Market Overview

• Location

• Access

• Supply

• Demand

• Seasonality

• Hotel Performance

• Operating Costs

• Land Price

• Economics Update

• Regional News Update

• Feature Article

• Investment Opportunities

23

Alternaty in the Press Annex

Rudolf Hever, interviewed on HTV9, speaking

at the Vietnam Hospitality Management

Conference on “Fractional Models:

Opportunities and Risks”, November 2012.

“Vietnam’s island paradise: but where

are the residential products?”, Rudolf

Hever, The Property Report, Dec 12 –

Jan 13

“Vietnam’s island paradise: but where

are the residential products?”, Rudolf

Hever, The Property Report, Dec 12 –

Jan 13 Mauro Gasparotti, interviewed on HTV9

(Nhip Cau Doanh Nhan - Businessman

Bridge) on Fractional Sale and

Timesharing Models, December 2012.

24

Conferences & Events Annex

Left-Right:

Mauro Gasparotti (L) and Rudolf Hever (R)

presenting the award for Best Condo

Vietnam (Hyatt Regency Danang to Mr Rick

Mayo-Smith, Managing Director, Indochina

Capital (C) at the South East Asia Property

Awards 2012 in Singapore.

Mauro Gasparotti (second from left)

speaking at a panel discussion on “Vietnam –

Finding the way forward” at the HICAP

Update held in Singapore in March 2013.

Left-Right:

Mauro Gasparotti (third from left) speaking

at a panel discussion on “Navigating into the

future: Vietnam” at the the Asia Pacific Hotel

Investment Conference heldin Bangkok in

May 2013.

Rudolf Hever (R) chairing a panel discussion

on “Condo Hotel, Villas and Branded

Residences – How Best to Accelerate Return

of Capital?” at the Asia Pacific Hotel

Investment Conference hled in Bangkok in

May 2013.

25

Connect with Us! Alternaty Social Media Channels

Annex

Twitter Facebook LinkedIn

og

SlideShare YouTube

26

Alternaty Villas – Online Direct Booking Website Annex

27

Thank You

Disclaimer: This document has been prepared in good faith and for general informational purposes only. Nothing herein contains investment, legal,

tax and/or other advice and investors should seek independent professional advice before making any investment decision. While reasonable care

has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such

information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission.