Demand for hotels of all types from small guesthouses to boutique, country house and large commercial properties have been so strong that in many areas of the UK it far exceeded supply. This has led to a rise in demand for hotels. Birmingham area is not excluded from this as the city has seen a sharp increase in the number of tourists and boasts a rich high-end clientele market. The city is the second most populated in England with a population of over two million. It is also the third largest financial centre in U. K with over 100,000 people working in the service sector. It is also home to Britain’s largest banks Lloyds and Midland Bank, it is also among the best places in Europe locate a business and those reasons have led to the increasing demand for accommodation and conference rooms (Chinn, 1994).
The concept of a contemporary hotel is predominantly the general map for how the hotel will meet the requirements and expectations of its anticipated market. A hotel operation’s model is articulated in numerous ways, including its menu, interior decoration, type of service, pricing, and site. Concept growth means developing a map for the accomplishment of the hotel business in its market in advance of really scheming let alone building the hotel. It is usual for some businesspersons to think about a new restaurant or, in fact, to start a new restaurant devoid of knowing what type of hospitality venture will have the best likelihood of succeeding. The potential capitalist may have some venture money, a site, or an idea in mind, and a great amount of interest for the hotel business, but may not actually have contemplated through the total idea of the operation. Sorry to say, interest and great food products are only half of the achievement equation. The other part of the achievement equation is the market. Concept development come before the definite design of the hospitality venture because the hotel design group must know the demand, menu, and hours of operation, and not forgetting the mode of service will be (Henry & Passmore, 1999).
The customer who most often comes to the food establishments design expert for help with idea development is the individual hotel owner. The hotel entrepreneur normally organizes a firm consisting of a small number of local businesspeople and then starts to build up a concept that will finally become a freestanding hotel. The hit or failure of the business enterprise frequently depends on how sound the idea was designed and how fine the plan was followed. The growth of foodservice concepts for hotels has evolved in recent years from the traditional view that considered the food and beverage department as unavoidable to the modern idea that the food and beverage department is an important profit center (Johnson, et al., 2008). Some large hotels have food and beverage sales of over $35 million per year, an amount that exceeds room sales and creates in management a high expectation of profit from these two departments.
The Green Hotel in city of Birmingham will develop a concept for its first class rooftop restaurant that goes beyond the idea of a foodservice facility as a profit center. The hotel will have luxury dining rooms and will be marketed to the city of Birmingham as well as to hotel guests. The decor will be exquisite; the food served with flair and showmanship, and the entire theme captures the imagination of the city’s residents. The concept will be developed with such success that the hotel will be expected to have numerous guests making reservations. Green Hotel concept will be an excellent example of the execution of a hotel dining concept that complements the hotel itself as well as draws a significant number of guests from the community. Hotel managers have known for many years that hotels must have certain desirable features if they are to be successful. These features include Availability of parking, unique theme, or décor, Strong promotion to the community, and a menu and a method of service that are distinctive (Yeung, 1998).
E. M. Statler’s famous quote, “The three most important things for the success of a hotel are location, location, and location,” is certainly true for many foodservice facilities. A poorly located restaurant will certainly experience a low level of sales, and a coffee shop in a hotel may miss a significant amount of business unless it has easy access both to the hotel guests and to street traffic. On a college campus, students typically will select convenience as the primary reason for eating in a particular food facility. Avoiding high rent by selecting inconvenient location or out of the mainstream of foot or automobile traffic is usually a bad decision. A location on the immediate left or right of an entrance to a shopping mall is often considered a poor location for a food facility, because the typical mall customer needs first to enter the mall and then look around for interesting places to shop and or eat (Fainstein, 1994).
Site selection includes the calculation of foot traffic, automobile counts, and distance to travel as a part of the feasibility study process. Other considerations for site selection are: Visual recognition. The hotel must be seen easily by potential customers and the appearance of the outside of the facility must communicate the character and concept of the dining experience inside. Convenience: The developers of a hotel, in which the customer has previously made a decision to dine, must consider parking, an attractive entrance, valet parking, and safe surroundings as important site selection criteria. Code restrictions: Site selection may involve local code requirements for setback from the street, parking capacity, street access, or the acceptability of a food facility in a particular neighborhood. Usually these code requirements are available from the engineering or city planning office of the municipality where the food facility will be located. Environmental issues: In suburban areas, the development of an attractive site for a foodservice facility may encroach on wetlands or adversely affect water runoff in nearby neighborhoods. In older, urban areas, sites may have previously been used for industrial and manufacturing processes that left dangerous materials in the ground. Environmental factors such as these are increasingly important to the site selection process because they present additional costs (Zeithaml, & Bitner, 2003).
Putting all those factors into consideration, the green hotel is expected to be located in the chamberlain square, next to the Birmingham Museum and Art Gallery. This location is very convenient and has a high traffic flow hence generating clients to the hotel. The hotel expects to get a large share of the tourists visiting the museum and art gallery. Its close proximity to the Airport is also expected to add to its competitive advantage, the Green Hotel concept is expected to be a hotel of its kind in the city. The hotel will be an eco-friendly facility just as the name suggests. The hotel will comply with the conservation standards, its design and building materials are expected to make it easily recognizable. The facility is expected to adhere to the environmental issues both during construction and in its operations. The selected site is convenient and in a safe surrounding which will play a major role in customer satisfaction. An ample contemporary parking will be developed to cater for the hotels guests, as the hotel target market is the high clientele (Parasuraman, et al., 1998).
The green hotel will strictly adhere to the rules and regulations of the city. This will involve local code requirements for setback from the street, parking capacity, street access, or the acceptability of a food facility in a particular neighborhood. Usually these code requirements are available from the engineering or city planning office of the municipality where the food facility will be located. Necessary legal documents will be obtained from the County Council and the set rules and regulations adhered. This will help avoid unnecessary costs that may be incurred due to failure to comply with the set rules.
This study is usually carried out to establish whether the hotel will return a profit to the owners. The hotel must be under a good management and must have a return on investment. The study is categorized into two namely market feasibility and financial feasibility studies. The market feasibility study focuses on the income statement and is conducted to determine whether revenues are sufficient to generate a profit. The financial feasibility study focuses on the balance sheet and is conducted to determine whether retained earnings (derived from net income) will be sufficient to satisfy the owners’ expectations for a return on their investment.
Market feasibility study
The level of sales revenues the Green hotel will be expected to generate. This really cannot be known until the operation has opened. The market feasibility study attempts to project the sales level for the operation before investors have committed their funds to purchase property, construct a building, and hire a team of employees. The sales revenue for the hotel is a function of two factors over an appropriate period: the number of customers and the price they paid. Sales=PriceÃ- Quantity (Bowie & Buttler, 2004). Market feasibility studies thus have to formulate sales estimates from two separate projections: How many customers will there be? How much will each customer spend? These two estimates are interrelated through the simple economic principle that demand is more or less a function of price. Market feasibility studies can be conducted either to test the feasibility of an established foodservice concept or to develop new foodservice concepts that would be appropriate for a given market. Understanding the Birmingham city’s residents demographic data is very important in predicting the hotel’s guest behavior. The Green Hotel concept will attract high-end clientele and business professionals who have enough disposable income. The hotel concept will include contemporary conference halls fitted with up to date technology hence attracting most of the business travelers visiting the city for business or other reasons.
The prevailing economic climate of the surrounding community has an important impact on the market feasibility of the hotel. The residents and visitors of the city have adequate disposable income meaning that the hotel will have many customers. The global economy is also growing after the decline and this means more people will travel to the city and will need accommodation services. The green hotel concept will be designed to offer high degree of perceived value rather than high prices. Economic projections obtained from the chamber of commerce clearly show that the hotel has a more than enough customers should the concept be well implemented. Traffic counts obtained also show the availability of potential customers for the hotel. Another important aspect is the availability of demand generators; the Green Hotel location gives it close proximity to several demand generators such as the Birmingham Museum and Art Gallery, airport, shopping malls, and sporting facilities (Hassanien & Losekoot, 2002).
A competitive analysis is crucial to the market feasibility study because the local market potential for a given concept must be shared among all of the competitors. The Birmingham area has many different hotels though targeting different markets. However, there is stiff competition for the high clientele market in the area but the Green concept has several competitive advantages. This ranges from offering high quality services, different prices and menus that beat what the competitors are offering. Competitive analysis will help the hotel in determining its share of the market and the unique selling points against the competitors. Marketing feasibility studies gives the owners or investors understanding as well as the confidence to start a business (Porter, 1980).
Financial feasibility study
This involves the financial projections of the proposed new hotel; different people will have different reasons for wanting the projections. For instance, the banker will be looking in part for the ratio of invested capital to borrowed capital. The banker may also want to know the amount of operating cash and the cash flow from sales that will be involved in the operation. The manager needs to know what his or her budget is and what the expectation of the owners is concerning profit and loss. The manager and the banker probably will not be using the same financial reports and projections, but they certainly will be getting their information from the same original source, which probably will be the financial feasibility study. In the financial feasibility study, two basic documents the projected balance sheet and the pro forma profit-and-loss statement usually are prepared, along with other supporting reports and schedules. A good outline of the kind of information that must be projected can be made by examining the line items on each of these documents.
After completing the market and financial feasibility studies and presenting them to bankers and potential investors, the owners can make a good judgment as to the potential success of the food facility project. Further contacts with zoning boards, liquor license agencies, and other municipal groups will bring the project to a point of decision. The accumulation of the data contained in the feasibility studies together with encouragement or discouragement from lenders, investors, and municipal agencies will lead the owner to the first go/no-go decision. In other words, if the project looks financially sound, the market is identified, a need for the foodservice exists, and the capital is obtainable, the decision to go ahead can be made (Medlik, 2000). If one or more elements of the go/no-go decision are uncertain, there are three alternative courses to explore. The first is to correct the problem area that has been identified. Is the facility too large? Are the labor costs too high? Is the menu wrong for the market? Is the competition too strong in the immediate trading area?
Green Hotel Concept Development to ensure customer satisfaction
A successful hotel concept combines several elements in the development, which include, market, funds, menu, method of execution and administration (Atkinson, 1988). The Green Hotel will combine all these fundamentals in order to attain the preferred results and be a leader in the hospitality industry. Market
This will be very crucial to the success of the hotel as it is in this stage that the hotel must recognize its target market. The Green Hotel concept expects to target business travelers and other hind end clientele. This market is justifiable in the city of Birmingham as it is a business hum in Europe hosting Britain’s largest banks Lloyds and Midland Bank, and this financial centre employs over 100,000 people. This means that there are a large number of business travelers and the living standards of the residents are high. This implies that the market is big enough to generate considerable sales and earn a profit. The hotel expects to communicate unique service quality to the customers; word of mouth is expected to be of great importance in marketing the hotel. A quality assurance plan will be developed to encourage return business and create customer loyalty. The concept will be developed in accordance with the market research conducted. This will be a competitive advantage as other big hotels in the city conduct the market analysis and then fail to act based on the information obtained (Loosemore, & Hsin, 2001).
The importance of the menu to the design of the food facility cannot be overemphasized. The subject of menu writing is too broad to be addressed adequately in a book on foodservice facilities design. The owner or manager is encouraged to seek additional sources of information as a part of the process of developing a menu for a new or renovated food operation. The menu has a tremendous influence on the design and success of a food operation. From a design and layout perspective, these are just some of the factors determined by the menu: Amount of space required: A complex menu requires more space to prepare than a limited or simple menu because separate workstations and additional equipment are necessary (Cooper, 1999). Service area size and design: The greater the number of menu items, the more area required for service. Dishwashing area size and dish machine capacity: Complex menus often require multiple plates, dishes, and utensils, so the dishwashing area and machine capacity will need to be greater than in the case of simple menus. Types of cooking equipment: Complex menus require multiple types of equipment, especially in the final preparation area, where it may be necessary to steam, and fry, bake, broil, and saut´ e. Equipment capacity: Limited menus may require relatively few pieces of equipment but with large capacities. Complex menus may require many different types of equipment with relatively small capacities. Size of dry and refrigerated storage areas: Complex menus may require larger storage areas to maintain the par stocks necessary to meet demand. Number of employees: Simple menus require fewer employees than complex menus (Cousins et al., 2002). Amount of investment required: When large or complex menus require more equipment, space, and employees, costs rise. According to its target, market the Green Hotel concept will have complex menus as opposed to a simple menu this will give the guests a variety to choose from hence more chances of customer satisfaction (Dimitriades, 2006).
This is the next important element that is needed for successfully developing a wining hotel concept. There has to be enough funds for; buying necessary equipment, building costs, décor, start up and operating costs and furniture cost. These funds should be identified and committed prior to planning. The green hotel concept expects to have a well laid out financial projections that will help get the necessary funding from investors and other lenders (Davis et al., 2008).
The quality of the management of the foodservice operation will be the most important element in achieving success. The green hotel must decide the person who will operate it and he/she must have adequate experience and professional knowledge to lead such a facility. The remuneration of the various employees will be well stipulated in the concept. There will also be motivation packages for the employees in order to achieve quality service delivery (Loftman & Nevin, 1996).
The concept will determine the organizational structure and the kind of management team that will be used to operate the food facility. The successful restaurant often is owned and operated by one individual whose personality becomes a part of the guests’ dining experience. In contrast, the management of the food and beverage department of a hotel may be under the control of more than one person and usually is part of a more complex organizational team. In this case, the policies and procedures of the food facility should be described in an operations manual to ensure consistent implementation of management policy (Lockwood & Medlik, 2002). From the point of view of the investor or the institutional administration, the management of a food facility must follow traditional management principles of good communication, strong controls, and sound personnel relations regardless of the number of people operating the facility. The operational philosophy and specific management guidelines to be used in foodservice operations must be carefully considered by the investors in a foodservice facility.
Methods of execution
The last step in concept development involves operational matters. Although the opening date might seem to be in the distant future to the person planning a food facility, decisions about operating methods must be made during the concept development phase on matters such as production methods, control systems, and personnel (Capon, 2004). In accordance with the target market, the concept will employ modern production methods and as such, the size of the kitchen will have to be big enough to hold the equipments plus the employees. The hotel will have different control systems in areas such as; sales, cash, food production, refrigeration and storeroom, quality, purchasing and receiving, portion and labor control.
Finally, approval of the new hotel will be complicated and very involving as it touches across several departments. Delays are then inevitable as the developer is eager to open the hotel for the customers. The solution to obtaining necessary approvals for a complex project like the green hotel is to develop a comprehensive checklist, in which each member of the planning team (architect, engineers, foodservice consultant, financial advisors, lawyers, etc.) submits a list of necessary agencies and deadlines. After dates are recorded, one person serves as the coordinator of the approval process. Typical approval agencies involved in foodservice projects include zoning board, Health department, Municipal engineers, City planner, Fire marshal, Liquor control board, Telephone Company, State, or federal agencies (Lee-Ross, D. & Lashley, C. (2008).
This paper examines the feasibility of a contemporary hotel concept in the Birmingham area. The study carried out clearly shows that there is a viable hotel concept in the city centre that would target the high-end clientele and business travelers visiting the region. The study starts with an examination of the city and the surrounding to identify the best location for the hotel. It has been noted that the site selection has much to do with the success of the hotel. Marketing and financial feasibility studies are normally requested by financial institutions before they make the commitments to offer any funds. Concept development for hotels and other institutions is currently a crucial stage in planning. Finally, agency approvals may be frustrating but are very useful in avoiding architectural and safety problems for protection of the community.