Monday, April 17, 2017

Why are hotels expensive even in developing countries? (Relative to rent and cost of living.)

Because most hotels - at least, those built by American or European countries - are built to American or European standards (or, to be fair, the standards that prevail in the world's most advanced nations).

You're not going to go to a developing country and skimp or cut corners or take shortcuts on building codes, building materials, furnishings, or fire codes or fire safety in building a hotel there. If something went wrong, it could go very badly for you, at the very least in terms of public relations. Or, if you furnished it on the cheap or used cheap materials, your property would within a few years stick out as less than your other properties and give your entire group a bad name. 

Image result for marriott luanda 

You'll want to offer the same furnishings and amenities, because that's what your customer base (and without a pretty good idea who the customer base is going to be, I won't even buy or build in the next town, never mind a developing country) counts upon you for and expects to see when they arrive, so you don't want it unraveling.

Also, you're dealing with increased costs: many of the things with which you'll be furnishing your hotel will have to be imported. Luanda, Angola, for one extreme example, has been on several lists of the world's most expensive cities for a few years now. Its economy never quite recovered from a civil war that occurred a few decades ago, so literally everything of value in that country has to be imported: plan on adding shipping and import duties. And now, they've found oil reserves there, creating a supply-and-demand problem on top of that. Meanwhile, the biggest need in that country for a few years to come? Housing. Plan on exorbitant land and construction costs.

I attempted to answer your question as I understood it (Why don't hotels get any cheaper as the rent and cost of living declines in less developed parts of the world?) I apologize if I did not understand the question correctly and did not give an appropriate answer accordingly. (Why is a hotel expensive by contrast to rent and cost of living, even in developing countries? It's like that everywhere.)

Originally appeared on Quora

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