Avoiding costly mistakes to cash in on boom

MANILA, Philippines - By 2014, an additional 4,000 hotel rooms will be coming onstream in Metro Manila, according to a study by global real estate services firm Jones Lang LaSalle Leechiu.

Among the firms seeking to cash in on a booming tourism market supported by government through tax incentives are the Raffles group which is putting up a luxury residence and all-suite hotel in Makati, the Fairmont Hotel which will be part of the Raffles complex, the Shangri-La group, Radisson Hotel, Holiday Inn, Ayala Hotels, Inc. among a host of other smaller players.

According to Lindsay Orr, chief operating officer of Jones Lang LaSalle Leechiu, developers new to the hotel sector are likely to pay a stiff price for mistakes made along the way as they learn the specific requirements of the industry. Orr recalls that just as it took some time for developers to master the needs of the BPO sector, the same process is likely to happen as more hotels and hospitality facilities are built out to meet the growing demand for tourist accommodations. Jones Lang LaSalle studies disclose that tourist arrivals have grown steadily from close to one million in 2003 to 3 million last year.

 “There’s a tuition fee of sorts developers pay before they master the most efficient way to service a new sector,” says Orr, whose firm operates in 60 countries. Jones Lang LaSalle is a financial and professional services firm specializing in real estate. In the Philippines, the company operates as Jones Lang LaSalle Leechiu.

By offering potential clients best practices, lists of suppliers and other relevant data mined from other Jones Lang LaSalle offices in the Asia Pacific region with active and more mature hotel sectors, the company’s Project and Development Services Group hopes to help owners and investors minimize costly mistakes. Projects managed by Jones Lang LaSalle’s Hotel Project Services unit in the region include the Ibis Hotel in Singapore, the award-winning Cape Yamu in Phuket Thailand and Westin Hotel-Hyderabad, India.

According to Kiko Abarquez, project and development services group head, the unit offers advice on design, construction and risk management for firms constructing new as well as refurbishing old buildings.

Having done fit-outs for more than 300,000 sqm. of mostly office space in the Philippines, Jones Lang LaSalle Leechiu has developed a library of costs. This wealth of knowledge allows the company to manage costs effectively and, 95 percent of the time, meet the construction budgets of its clients. As project manager, JLLL Project and Development Services Group represents the client as it oversees and audits the various activities and products of architects, suppliers and the contractor involved in a project.

Abarquez explains that the aim of a project manager is “to match the designer’s requirements for looks with the client’s requirements for costs.” He relates that designers may not be familiar with all the materials available in the market and may perhaps suggest a wall to be covered with costly fabric when a paint treatment will achieve the same desired effect for less.

Among the innovations Jones Lang LaSalle Leechiu is currently introducing to the industry is a paperless project site with clients, suppliers and contractors all communicating through a website to be managed by the firm. Abarquez points out that significant delays are caused by poor communications and delays always have a cost. Plans and schemes written on paper for the approval of the client are likely to get stuck at a secretary’s or assistant’s desk. Things get misplaced in the paper shuffle and must be reconstructed. Because one supplier is late, another one cannot proceed with its work.