AUSTIN, TEXAS—A newly released HFTP study—Pre-Opening Expenditures in Hospitality—investigates pre-opening budget timelines and procedures in the hospitality industry. Commissioned by Hospitality Financial and Technology Professionals (HFTP) and authored by Agnes DeFranco, Ed.D., CHAE and Arlene Ramirez, MBA, CHAE, CHE, CHIA of the Conrad N. Hilton College, University of Houston, and Tanya Venegas, MBA, MHM, CHIA, director of customer success at HotStats, the study aims to clarify understanding of the optimal pre-opening processes and components across hotels of a variety of types, sizes, and geographic locations.
“The researchers identified a significant blind spot in industry knowledge and took bold steps to fill that gap,” said HFTP CEO Frank Wolfe, CAE. “Their work is a crucial contribution to HFTP’s initiative to provide current, high-quality educational resources to our industry.”
The researchers surveyed executives with experience in hospitality and/or finance to understand their experiences and unique approaches to the process. Respondents oversaw an average of 22 hotels each, which ranged across five continents. The majority of the properties represented were classified as luxury/upscale. Guidance based on contributors’ responses includes common practices for pre-opening budgeting: development, timeline, and oversight. Within the budget planning is a chart of top expenses by property class and labor costs, with details on hiring timelines and employee relocation benefits. In addition, the report offers pre-opening timelines for the selection, installation, and training for hardware and software systems.
When asked their thoughts on the outcome of the study, the three researchers commented as follows: “An interesting aspect of this study was the variety in the interpretation of what should be contained in the pre-opening budget. The study reflects the need for more clarification and guidelines on the timing and types of costs that should be included in order to be compliant with GAAP and provide management with information that is useful in making decisions during this phase of project development.”