The recent ruling on the St. Regis lawsuit brought out some interesting issues from a hotel expert vantage point. In particular is what I call the “On Time, On Budget” barometer which project management aspires to in developing a hotel. In this circumstance, spending more time and money and the non adherence to a specific plan added a lawsuit award of $42 Million. In the case – Sheraton Operating Corp. v. Castillo Grand LLC – and according to the Plaintiff’s attorney in HotelNewsNow.com: “the hotel opened its doors two years later than planned in 2007;” and “Most of the US$44 million in damages awarded were related to the extra costs incurred by Castillo Grand because of the delay.” Hotel owners, lawyers and their hotel expert can read the full story here. The takeaway here is that owners want a clearly defined plan and one that will stay within a reasonable project timeline and estimated budget. Owners and hotel lodging management normally expect, where a brand is involved, that design and construction processes will be more streamlined due to the pre-existence of the brand guidelines and requirements. Twenty four months of delays is highly unusual to construct and open a hotel. Still, these delays in opening can add more financial consequences if other new hotel projects are opening when the current project should have established its own market share. The potential lost future income is also compounded when a major recession is going on. Are you a hotel resort management company involved in overseeing the development and opening of a new hotel or resort? If so, please share the estimated cost overruns that you factor in and to be anticipated as a hotel expert for our readers.
