A Strategic Evaluation Model for Hotel Investments: A Value Management Approach for Key Stakeholders

The Covid-19 pandemic severely impacted the hotel industry, with hotels bearing the brunt of the onslaught, to a greater degree than the airlines and tour operators. Preceding the advent of the pandemic, hotels were already habitually perceived by a broad consensus as a precarious hybrid asset-class investment, simultaneously encompassing the risks of both physical real estate and business operations. To further confound the predicament, there is no systemic evaluation framework for hotel investments, with each stakeholder appraising opportunities based on their own criteria in silo, and allegedly at odds with one another. This study proposes to identify the key stakeholders and determinants in the hotel industry, to weight and rank said determinants in developing a Value Management approach to evaluate hotel investments. A Sequential Exploratory Mixed-Methods research design was adopted, with the preliminary inductive approach utilising textual thematic analysis identifying 75 components across 11 categories. In contrast, the second deductive approach quantitatively collected and analysed responses in form of value predilections from 104 participants across 4 key stakeholder groups. Data collected was evaluated to be valid and reliable, but non-normally distributed. All 11 independent variables were deemed statistically significant, while “Location Specific”, “Financial Considerations”, and “Property Specific” aspects were designated the three lead predictors towards a successful hotel investment. Near homogeneity among the stakeholder groups were observed, with “Financiers (Equity/Debt)” and “Asset Owners & Developers” placing higher emphasis on Financial Considerations as a predictor determinant towards a hotel investment’s success, as opposed to “Hotel Management, Operators & Chains” and “Advisor & Consultants” stakeholder groups. The findings were subsequently mapped into an evaluative model with a Multi-Criteria Decision Making method, in line with the princip