Zsuzsa Deli-Gray (ed.)

Cases in Tourism Marketing III

The Significance of Data Analysis in Strategic Tourism Investment Decisions

Péter Kraft, Kata Sára Gyuricza

Following the completion of his ambassadorial mission, Dr Péter Kraft reflected on future professional challenges in his study in Peru. With a proven track record in corporate leadership and public administration, and notable contributions to Hungarian tourism, he decided to pursue an entrepreneurial venture.

In the early 1990s, Dr. Kraft identified the potential of the Hungarian market for credit cards and persuaded the leadership of American Express to invest. As the company’s first Managing Director in Hungary, he rapidly established a regional benchmark for operational excellence. After leaving American Express he joined the Hungarian government. During his tenure as State Secretary for Tourism, he launched the Széchenyi Plan for Tourism, resulting in a substantial increase in the national budget for tourism development. This experience, and his commitment to advancing Hungarian tourism, subsequently guided the establishment of KRAFT & Associates – Tourism Development.

According to the United Nations (UN, 2010), there is a key difference between a tourist and a visitor, because a tourist generates at least one overnight stay. Based on this distinction, Mr. Kraft realised that the development of lodging infrastructure is paramount to the advancement of Hungarian tourism. Consequently, hotel development became the core strength of KRAFT & Associates.

Years later, in Budapest’s 13th district Mr. Kraft presented a proposal to convert an office building into a hotel to one of the 100 Richest Persons of Hungary. Following the presentation, the investor suggested that a similar development opportunity might be of interest to another businessman, in a location placed in the Rural area.

During discussions with the recommended businessman, Mr. Kraft identified that the planned developments in the location will generate significant demand for business accommodation, which would exceed the city’s existing capacity. To address the future demand, the parties considered repurposing an office building owned by the businessman as the site for the new hotel development.

The academic literature on hotel development began to take shape in the mid-20th century, emerging alongside the rapid growth of air travel. The world’s first hotel chain was founded in Texas, USA, by Conrad Hilton. One of the key factors behind Hilton’s success and swift expansion was separating ownership from operational roles. This model allowed the hotel operator to focus exclusively on the details of day-to-day management, while the investor-owner assumed responsibility for the financial risks of the venture ( The Economist, 2013 ).

In 1966, Professor Slavoj Medlik identified the principal factors that must be considered when developing a hotel: location, location, and location.

Medlik distinguished three specific dimensions in the interpretation of location, focusing on the relationship between the existing and the potential supply and demand generated by a new hotel.

According to his model, a hotel development project is justified and can meaningfully influence demand in the following cases ( Medlik, 1966 ):

When existing demand exceeds existing supply: the new hotel can absorb the surplus demand within the same accommodation category.
When the quality of the existing supply is inferior to that of the planned hotel: the new hotel can be positioned in a higher category, thereby attracting those segments of demand seeking superior service quality.
When no existing supply is present: the proposed hotel – if designed with appropriate spatial planning and service provision – can generate entirely new demand, effectively creating a market where none previously existed.

Clarence H. Peters, a specialist at Leventhal and Horwath, later refined this framework by noting that, given the long time horizon of hotel development (planning, construction, and market entry phases can together span five to ten years), it is essential not only to analyse the current characteristics of a location, but also to take into account future corporate and infrastructural developments ( Peters, 1978 ).

In hotel development, it is crucial to align the interests and perspectives of the involved stakeholders. This process requires a broad effort in communication, education, and marketing. The process can only succeed if the arguments and decisions are substantiated by thorough data analysis.

The successful implementation of hotel development is greatly enhanced if both the analysis and the coordination of data is entrusted to experienced professionals with a strong track record.

A comprehensive Feasibility Study and Financial Plan typically require between 800 and 1,000 working hours. The associated cost usually represents less than 1% of the total investment, yet this initial expenditure is critical to ensuring the future success of the development.

With over 30 years of experience in hotel development, KRAFT & Associates has observed that many investors either neglect or underestimate the importance of preparing a well-founded, detailed Feasibility Study. Often, due to lack of experience, they fail to appreciate the study’s long-term benefits: specifically, its potential to save time and costs in later project phases, and to enhance significantly overall profitability.

By engaging KRAFT & Associates as professional consultants, the Owner of the hotel benefited from the following key advantages:

Professional location analysis: Comprehensive market knowledge and adherence to international best practices enables the identification of development opportunities that may not be apparent to investors lacking industry-specific expertise. KRAFT & Associates has facilitated the successful launch of multiple hotel projects, with owners electing to proceed following extensive consultations, rigorous data analysis, and benchmarking against exemplary projects. Conversely, projects that disregarded the recommendations outlined in professional consultancy reports frequently encountered operational challenges, resulting in premature closure or failure to commence operations.
Service portfolio based on potential market segments: While room sales have historically constituted the primary source of income for hotels, the contribution of ancillary services – such as catering, wellness, and event space rental – can be substantial, depending on the hotel’s type and target clientele. Effective design and optimisation of the service portfolio necessitate comprehensive market analysis and a strategic selection of offerings tailored to the preferences and needs of identified segments.
Professionally structured spatial layout: As construction often constitutes the largest cost component of hotel investment, it is critical that spatial allocation decisions are informed by the hotel’s intended category and targeted market segment. Professional hotel development consulting ensures that spatial planning aligns with business objectives, balancing architectural ambition with cost-effectiveness and market requirements.
Expertise in international brands: Leading hotel groups, such as Marriott International, continuously expand their brand portfolios to address diverse market segments. As of 2025, Marriott operates 31 brands across 8,500 hotels in 138 countries, managing approximately 1.5 million rooms.
Similarly, Hilton Hotels maintains a broad international presence, with 22 brands in 123 countries, comprising of 7,295 hotels and about 1 million rooms. Understanding the strategic differentiation and operational requirements of these brands enables hotel developers to align their projects with market trends and consumer preferences.
Extensive international network: Establishing contact with the appropriate development directors within international networks requires not only industry expertise, but also a competitive project proposal. Developers must demonstrate the business potential of the location, the projected profitability of the hotel, and the credibility of the ownership partnership to secure the interest of international hotel chains. The absence of these elements can significantly hinder the development of a high-quality hotel under an international brand.

In the preliminary discussions and market surveys, Mr. Kraft presented a development plan for the hotel. The proposal specified a four-star, 100+ room business and conference hotel, strategically designed to address identified gaps in the local hospitality market.

KRAFT & Associates – Tourism Development studied in detail the hotel capacity of the city and its surroundings, highlighting the conference facilities and the average net room prices.

The benchmark analysis was carried out using the proprietary model developed by KRAFT & Associates over the past 20 years (KRAFT Mapping Model) to identify a market niche that is currently not being filled by the existing hotel supply.

The benchmark analysis was carried out using the proprietary model developed by KRAFT & Associates over the past 20 years (KRAFT Mapping Model) to identify a market niche that was currently not being filled by the existing hotel supply.

At the outset, the Owner considered a traditional lease arrangement, in-time with standard practices in commercial real estate, such as offices, retail spaces and warehouses. Consequently, KRAFT & Associates initiated the project by providing a detailed explanation of the two business models prevalent in the hotel industry: the tenant (lease) model and the operator model.

These models differ significantly in the allocation of operational risks and the distribution of profitability, necessitating careful evaluation to determine the most suitable approach for hotel development.

Lease model: the Owner's income is determined by a mutually agreed fixed amount in advance, providing predictable long-term revenue. However, operational risk is borne entirely by the tenant, as the Owner is only entitled to the agreed income, and does not participate in the operation. Under this arrangement, the expected profitability of the hotel aligns with the returns from other commercial real estate assets – such as office buildings, retail spaces or warehouses – and typically ranges from 6 to 8% of the invested capital.
Operator model: operational risk is shared between Owner and Operator, with the expectation of achieving higher investor returns compared to the lease model. Rather than receiving a fixed rental amount, the Operator’s remuneration consists of a predetermined percentage of the hotel’s revenue and a specified share of the Gross Operating Profit. Under this arrangement, the expected return on investment for the hotel typically ranges around 10 to 12%.

Considering both models, KRAFT & Associates developed a comprehensive Feasibility Study for the proposed hotel. This encompassed an in-depth analysis of the location, considering both current attributes and the expected future developments. Furthermore, the Feasibility Study systematically examined national, regional and local tourism trends, supply and demand metrics, and the conceptual framework of the planned hotel, with particular focus on assessing as a strategic market segment the potential of conference tourism.

The Feasibility Study included a comprehensive Financial Plan, a model also developed by KRAFT & Associates over the past 15–20 years. The Financial Plan consisted of 20 pages of interconnected Excel spreadsheets projecting expected revenues and expenses for a 15-year period from the hotel’s opening and establishing the pricing of its services.

In addition to forecasting operating revenues and expenses, the Financial Plan included recommendations for optimal land use. Drawing on over 20 years of experience, KRAFT & Associates observed that hotel development projects often suffered from suboptimal land allocation when architectural design preceded the completion of a Feasibility Study. By conducting the Feasibility Study, including land allocation proposals, prior to architectural design, the project can establish a robust foundation for maximising future profitability.

Following the recommendations of the Feasibility Study, the Owner opted for the Operator model for the future hotel, prompting KRAFT & Associates to conduct an international search for a suitable operator and brand willing to manage a hotel in a rural location.

Following the recommendations of the Feasibility Study, the Owner opted to pursue for the future hotel the Operator model, prompting KRAFT & Associates to conduct an international search for a suitable operator and brand willing to manage a hotel in a rural location.

Competitor analysis revealed that a hotel in the location had been in the planning phase with an international hotel brand, reflecting the Municipality’s longstanding openness to international hotel investment. However, implementation was delayed due to insufficient professional experience and international contacts.

Through effective coordination of advisory services and stakeholder interests, KRAFT & Associates successfully facilitated the introduction of an international brand to the city's hospitality market. The hotel continues to be recognised as a source of local pride.

Drawing on the Feasibility Study developed for the Owner, KRAFT & Associates prepared the Information Memorandum designed to position the Kecskemét hotel as an attractive opportunity for leading international hotel chains. The document’s structure followed a strategic sequence: first national tourism, followed by an analysis of anticipated developments at the county and city levels. Only after this broader context was described were the specific features and operational advantages detailed.

The international experience of KRAFT & Associates was instrumental in the preparation of the Financial Plan, which adhered to the guidelines of the Uniform System of Accounts for the Lodging Industry (USALI, www.usali.hftp.org). Developed in 1926 by the Hungarian Horváth brothers and published by the Hotel Association of New York City, USALI has become the global standard for hotel accounting over the past century. By presenting the Financial Plan in accordance with USALI, KRAFT & Associates ensured that the future operation of the hotel would be transparent and easily understandable for international hotel chains. This adherence to recognised industry standards enhanced confidence in the project and facilitated interest from international brands previously absent in the region.

Hotel development projects, given their strategic significance, may be eligible for a range of financing options, including bank loans, state-backed loans and non-refundable subsidies. Securing such funding requires comprehensive and detailed data analysis to meet the assessment criteria of both financial institutions and government agencies. In the case of the currently discussed hotel, the thorough Feasibility Study and Financial Plan, prepared by KRAFT & Associates in accordance with USALI guidelines, were instrumental in obtaining bank financing. Furthermore, the state support received for the project contributed to a higher-than-expected return on investment.

By leveraging comprehensive data analysis and specialised consulting services, KRAFT & Associates facilitated intermediary, educational and marketing activities among the key stakeholders. This coordinated approach significantly contributed to the successful implementation of the currently analysed hotel development project.

Tartalomjegyzék

Kiadó: Akadémiai Kiadó

Online megjelenés éve: 2026

ISBN: 978 963 664 217 4

Marketing Turizmus

The publication of the third volume of Cases in Tourism Marketing is truly welcome news from both an educational and a professional perspective. Through real-world, timely, and thought-provoking cases, this collection helps readers – students and practitioners alike – gain a deeper understanding of the complex world of decision-making in tourism marketing. The case studies not only convey professional knowledge but also develop analytical skills, problem-solving abilities, and critical thinking. One of the volume’s key strengths is its focus on issues that define contemporary tourism, including the role of digitalization, artificial intelligence, destination branding, and stakeholder collaboration in tourism marketing. Long-awaited and highly relevant, this third volume is a worthy continuation of the previous collections and will undoubtedly serve as a valuable resource in higher education in tourism, while also being highly recommended to professionals who enjoy reflecting on challenges and opportunities beyond their own immediate field of expertise.

Tamara Ratz PhD

Director, Centre for International Relations, Kodolányi János University

Head of Tourism Department, Professor of Tourism

It is an honor for me to recommend this volume to everyone who wishes to understand tourism marketing not only in theory, but also through its real business and human dimensions. The worlds of tourism and hospitality have undergone fundamental changes in recent years, which makes case studies based on real market situations, decision-making dilemmas and current challenges especially valuable in supporting both learning and critical thinking. This book provides not only professional knowledge, but also encourages a complex mindset, creative problem-solving and the ability to think in connections — exactly the skills today’s tourism professionals need most. I wholeheartedly recommend this volume to students, educators and tourism professionals alike.

Judit Fodor (Liptai)

Group Director of Sales and Marketing, Danubius Hotels

Hivatkozás: https://mersz.hu/deli-gray-cases-in-toursim-marketing-iii//

BibTeX EndNote Mendeley Zotero