How to Target Hotel Markets
Product-Market fit starts with the market
What makes a target market worth targeting for a hotel?
First, the obvious - Product-Market fit applies here the same in any business environment. A market that is ready for a TownePlace Suites is rarely ready for a full-service Marriott with 30,000 sq ft of meeting space.
TEKMAK Development specializes in developing custom upper-midscale select service and extended stay hotels (e.g. SpringHill Suites, TownePlace Suites, Home2Suites, etc) for suburban, secondary and tertiary markets.
So how does TEKMAK identify target markets?
It begins with data.
What is the current and historical performance of the existing hotels and how does that translate to a future hotel. There are several powerhouse data providers, such as CoStar out there, but these national providers do not yet provide granular enough submarkets to prove useful for our target markets.
About half of U.S. States impose a lodging tax, making hotel revenue publicly available data.
Texas is one of these states, and there are a couple of good Texas based data sources for this information. TexasRevPar &
Source Strategies being our preferred data sources.
Typical of most asset classes - what is the strength and trajectory of the local and surrounding economy: job growth, unemployment rate, household income, etc.
Performance of hotels is rarely sustained by only a handful of major drivers (e.g. convention centers, professional sports, etc). Instead, there are 1,000 different drivers that sustain performance.
🏢 Large businesses
👨💼Small businesses
👨🏫 Colleges
🏐 Youth sports
🛍️ New retail openings
🚧 New construction
Identifying market tailwinds isn't just about data though, especially in the suburban markets. Having an intimate understanding of a community and county is critical.
This is one reason why TEKMAK focuses on markets within a certain radius from our home base - no one knows our markets better than we do outside of the local community themselves.
Also of critical importance, are there any hotels in the pipeline for this market. This filter is one of the quickest ways to eliminate a market.
It is worth noting in the current environment, there is a big difference between hotels that are "planned" or in the "planning phase", and hotels that are actually coming to market soon.
Once a market appears to indeed be a worthwhile target market, the next questions to ask are:
-Is there a viable site for the hotel?
-What flag is the right one for this market and site?
