Case Summary: In December 2001, Xavier Faus finds himself as one of the owners of the Arts Hotel Project in Barcelona, Spain. The 455-room hotel is managed by the Real Cortez and is in a 44-story tower along Barcelona's beachfront. Faus needs to figure out a strategy to maximize his investment including a negotiation of the Real's operating agreement.
Study Questions:
1. Is branding important in the hotel business and can it be applied to other property types?
2. Xavier has acquired a bundle of real estate and other assets for one purchase price. What was the
effective cost paid for the hotel only when Faus acquired it? What is the current unleveraged cash
yield and leveraged cash yield for the hotel only? What is the value of the hotel only as of
December 2001?
3.
What are the risks in this property type and this hotel in particular? How do hotels differ from
other property types?
4. How would you seek to alter the current management agreement to better align the incentives and
to increase the value of the hotel? What would your negotiating strategy be and how do you think
the Real Cortez would respond?

Answer rating: 100% (QA)

Is branding important in the hotel business and can it be applied to other property types Yes branding is crucial in the hotel business A strong brand can enhance the hotels reputation attract guests ... View the full answer