Determination Of Target Cost Of High-Star Hotel Development Projects: In Perspective Of Project Value

With the continuous progress of high-star hotel development projects and the increasingly fierce market competition, more and more real estate development enterprises begin to choose to control project cost by target cost management. But in actual application process, the determination of target cost of high-star hotel development projects is based on summary of previous management experience or copy of the standard methods of other benchmarking enterprises. As the determination of target cost of high-star hotel development projects lacks macro and systematic data control, the investment control target and actual cost often inconsistent obviously with practical work. The reason is that both of the two mainstream target cost management methods, namely cost rectification under passive control or quota design under active control, are not applicable to the development projects of high-star hotel, which shall seek for profits and incarnate the architectural thought simultaneously. Especially, based on the brand features that the brand value economics indicated, the real estate development enterprises who conducting high-star hotel projects tend to cooperate with reputed hotel management companies to save trading cost and play emphasis on brand effect. While the isolate use of passive control or active control of them usually fail to realize the goal of value maximization in life cycle of projects.Respecting the above-mentioned facts, through abstraction and decomposition of practical problems, the paper presents a control method to combine the passive and active control in target cost management from perspective of value maximization in life cycle of high-star hotel development projects. The main contents and innovative points of this paper specifically in following aspects:Firstly, target cost prediction of high-star hotel development projects based on the stakeholder needs analysis and functional orientation of the hotel. At first, the textual analysis method is used to determine the main stakeholders as the investor, the hotel management company, customers and their needs. In combination with design standard of high-star hotel and market research data, the function allocation elements of the hotel are ascertained and the hotel functions are decomposed and divided into three categories of basic function, core function and development function. And then, the design parameters of the hotel are determined according to the needs of stakeholders and the design standard. Finally, the predication model for high-star hotel target cost is built from perspective of backward induction through reasonable predication of the sales revenue and target profit to determine target cost.Secondly, the optimization of target cost of high-star hotel development projects is provided on the basis of life cycle theory and value engineering theory. The reference standard for target cost of high star hotel development projects is determined through field investigation and summary of construction scale, total amount of investment of the completed high-star hotels and requirements of regional allocation specifications specified in the design standard of famous hotel management companies. The conclusion that quota design and value engineering theory must be combined with the practical needs and application methods through study of relevant documents and summary of actual conditions is reached. Finally, influencing factors of the previous design schemes on target cost are listed, the key points of high-star hotel design optimization are obtained by the focus group and the results were verified with specific cases.In conclusion, this article proposes a third cost control method that the combination of active and passive control, which enable the real estate development cost under three constraints of permitted scope of investment, design concept framework and market environment, and realize both the match of target cost and project results and the match of profit target and project value to provide a reference for real estate enterprises in making optimal project development decision.