Constructing assets: on innovations, challenges and solutions

When developing or redeveloping hotel and other hospitality/leisure assets, there are several objectives. To be a success, a project must be completed:

• on time
• within budget
• in line with the specifications
• without disputes

These objectives must all be met in order to make such a project a success. The hotel is scheduled to open on a certain date and has already accepted reservations. The purpose of the hotel is to generate a certain revenue and profitability: a budget overrun does not fit well in a sector driven by closely monitored profit margins. Having an asset that does not meet the requirements means that hotel brand requirements are not adhered to which disappoints guests. Disputes are never welcomed, whether it is between the developer and the contractor, between the hotel management and stakeholders, or with tired guests whose stay has been disturbed due to construction works.

In addition, the requirements, expectations and circumstances relevant for successfully building and operating a hotel (as well as other hospitality and leisure assets) are changing. To give five examples:

1. ‘Green’ is becoming more and more important: assets need to be constructed in a circular manner, customers demand increased environmental friendliness and assets need to be better adapted to climate change.
2. Where green field construction used to be the standard, now an increasing number of projects concern brown field redevelopment. Just think of a redevelopment of a historical building in a busy city centre: there are very specific risks to address.
3. The usage of such assets is changing. We are seeing more mixed usage assets, new forms of temporary student housing, dark kitchens and on-demand grocery shopping hubs. Innovations that are accompanied with different challenges.
4. While the capacity of construction companies is decreasing, prices of building materials are increasing. At the same time, budgets and scheduling must still be met.
5. There is a demand for capacity in more remote areas of the world. Working in such places has a range of considerations to take into account.

Such challenges and risks can be addressed by a range of solutions. To give five examples of solutions we will touch upon in future Construction Columns:

1. Measures to ensure you choose the right legal set-up for your construction project.
2. Innovative and collaborative building contracts to prevent surprises and get what you want.
3. Applying new building methods, such as re-using building materials and making these re-usable, modular construction and flexible set-ups.
4. Usage of contech and proptech to monitor progress of a project and improve effectiveness of maintenance.
5. Legal and non-legal tools to increase the chance of a successful project.

We are looking forward to updating you on these exciting developments and solutions. If there are any specific topics you would like to see discussed in this column, do reach out to us.