FAQs
What are the big pre-open costs?
Much like ongoing operations, labor accounts for the largest pre-opening expense, accounting for 36.3% of budgets. That doesn’t account for all labor-related costs like training, which accounts for 4.3% on its own, and recruiting, at 2.3%.
Determining the correct cost of labor seems to be done largely through a combination of homework and experience. A total of 41% said they determine it through their projects’ pro forma with another 47% saying it’s based on previous openings they’ve done.
The second largest was working capital, coming in at a quarter of the budget, even though it isn’t technically a pre-opening expense.
“Working capital is basically the cash requirements you need to ensure you have money available for the first few weeks of opening the hotel before you start generating cash,” Ramirez said. “This is really not an expense. This is a bank account, a loan or a liability you took on. Or it could be something the owner of developer provides you. But you will be paying that back in some form of fashion.”
What is the importance things be hired for Hotel Pre-opening?
Not surprisingly, GMs are typically hired well before opening for projects at an average of 44 weeks before the start of operations, but, on average, that’s not technically the first hire. According to the University of Houston survey, directors of sales and marketing are typically hired 47 weeks ahead of opening.
Directors of finance are the next earlier hire, 30 weeks out from opening, with other director-level positions falling between 28 and 19 weeks.
GM hires often have different expenses attached to the process, such as transportation and meals, due to only 35.7% of them being classified as local hires. According to the survey, 93.8% of GM hires have relocation expenses paid. Those expenses include things like temporary housing and moving costs.
What was the most challenging part of working in a pre-opening hotel?
As the first SPH, property in Indonesia and a relatively new brand in the market, SPHM Hospitality had to lay the groundwork and build local standard operating procedures from scratch. We also had no ‘sister properties’ in the region to rely on for support so we had no references or templates to draw on. However, this also gave us the flexibility to set new standards and thus differentiate ourselves from other established brands in the market.
What is Pre-opening Budget?
The pre opening budget is the plan for your business's initial expenses. It's a list of everything you'll need to open your doors and start earning revenue, from rent to equipment purchases. The tricky part about pre opening budgets is that you don't know exactly what you'll need until after you've opened.
What is a Pre-opening Checklist?
The checklist covers tasks such as hiring staff, obtaining licenses, signing commercial protection contracts, and enrolling the general manager and expatriates for required programs.
What is Pre-opening Expenses or Cost?
Pre-Opening Costs means the costs necessary to begin operations including advertising, equipment purchases, legal fees, accounting fees, consulting fees, pre-paid insurance, pre-paid rent, licensure fees, deposits (rent, utilities), requirement, staffing, and training.