Planning for a successful hotel project

25 January 2018

A batch of High Court cases from 2017 reminds us of the challenges that arise when building hotels.  Last year we saw cases concerning a new luxury hotel near Heathrow Airport,[1] works to the Albert Embankment Crowne Plaza[2] and a new hotel at Lifeboat Quay in Poole[3].

It is not unusual for hotel projects to feature in construction disputes.  Industry factors, such as a competitive hotel market and a desire for early revenue generation, play a part with developers under pressure to commence construction as early as possible.

A successful hotel project requires forethought, the early involvement of the operator and in-depth consideration of market demands and trends.  These and other key terms must be considered from an early stage, especially when using a franchise or management contract.  Including all the main provisions in agreed heads of terms will ultimately save time and cost.

On the construction side, it is important to develop a suitable procurement strategy and ensure the site is properly surveyed and investigated before any works commence.  Sufficient time must be allowed for the design to develop so that costly late variations can be avoided.  Suppliers must also be engaged on appropriate terms, with the necessary insurances in place.  Contracts should not simply be forgotten about once signed but must be properly managed.  Relevant dates for service of payment related notices must be diarised and any notices issued on time.

Time and effort must be invested in making sure that the right hotel project is entered into from the start.  Preparation is key to a successful hotel project and good preparation will reduce the chances of disputes arising.

[1] Riva Properties Ltd v Foster + Partners Ltd [2017] EWHC 2574

[2] Rossair Ltd v Primus Build Ltd [2017] EWHC 2430 (TCC)

[3] Dawnus Construction Holdings Ltd v Marsh Life Ltd [2017] EWHC 1066 (TCC)