Compare complete project cash requirements, not just purchase price or construction cost per room. Our recommended screening framework is:
| Route | When to investigate it | Evidence to obtain before committing | Funding comparison |
|---|---|---|---|
| Acquire and operate substantially as-is | The existing product and operating model appear close to the buyer’s objectives | Normalised accounts, condition survey, contract transfer requirements and immediate capital schedule | Purchase, transaction costs, initial liquidity and identified works |
| Acquire and reposition | The investment thesis depends on changes to rooms, facilities, service or distribution | Demand evidence, scope, contractor pricing, phasing and operator mobilisation plan | The above plus works, lost contribution, reopening costs and ramp-up cash |
| Convert a non-hotel building | The building and location merit a hotel feasibility investigation | Lawful-use pathway, test-fit, accessibility, fire/life safety, services capacity and specialist surveys | Acquisition plus conversion, professional fees, approvals, carry, contingency and opening liquidity |
HVS’s July 13, 2026 development-cost survey uses construction budgets collected in 2025. It explains that the sample’s heavier concentration in limited-service and extended-stay projects pulled the overall median down even while construction costs increased. That mix effect is a reason not to treat the national median as the budget for a distinctive adaptive-reuse boutique. (hvs.com)
Which obligations belong in the comparison before design is finalised?
- Accessibility: DOJ guidance explains that alterations must be accessible to the maximum extent feasible, while existing-facility barrier-removal obligations have their own framework. Commission a property-specific assessment rather than assuming an older building is exempt. (ada.gov)
- Consumer price presentation: the FTC’s fee rule took effect May 12, 2025 and addresses misleading price presentation in short-term lodging. It does not prohibit particular fee types or amounts; the core issue is truthful upfront pricing. Include booking-path compliance in commercial and systems diligence. (ftc.gov)
- Local and property-specific costs: request written advice on zoning, permits, employment arrangements, taxes and licences, plus current insurance terms and exclusions. This is a diligence recommendation, not a conclusion that any particular local rule applies.
Our capital-budget rule is to distinguish required asset preservation, legally required works, affiliation requirements and discretionary positioning investment. Only the genuinely incremental expenditure should be attributed to a proposed brand or operator change.