What Makes a Good Hotel

A good hotel is never defined by aesthetics alone. Nor is it defined purely by friendly service or short-term financial performance.

A Hotel Building - Image by AI

A good hotel is the result of strategic alignment—between design, operations, people, market positioning, and long-term financial logic. When one of these elements is weak, a hotel may still operate, but it will rarely perform at its full potential.

At its core, a hotel is not merely a building; it is a living operational system designed to function continuously, adapt to market changes, and deliver consistent experiences over decades.

A Hotel Is a Build-to-Operate Asset

Unlike residential or most commercial real estate, hotels are fundamentally build-to-operate properties. Residential buildings are handed over after completion, and office buildings are delivered as empty shells. Hotels, by contrast, must operate 24 hours a day, 365 days a year, often for 40 to 60 years.

This reality has profound implications for planning and design. Architectural appearance alone is insufficient. Many hotels look impressive on opening day but struggle operationally due to inefficient layouts, poor service circulation, or inadequate back-of-house facilities. A good hotel is one where operational requirements are embedded into the project from the earliest planning stages—not retrofitted after construction is complete.

The Dual Nature of the Hotel Product

A hotel product consists of two inseparable pillars: physical product and non-physical product.

The physical product encompasses the entire tangible and environmental experience offered to guests, including:

• Architecture and façade

• Landscape design, whether a created landscape or the integration of natural beauty, such as beaches, mountains, lakes, rivers, gardens, courtyards, rooftops, or urban vistas

• Interior design and spatial layout

• Mechanical, electrical, and plumbing systems

• IT and connectivity infrastructure

• Furniture, fixtures, and equipment

  
  

Landscape is a critical yet often underestimated component of the hotel’s physical product. A thoughtfully designed landscape enhances the arrival sequence, strengthens emotional connection, improves microclimate comfort, and extends usable guest areas. Whether through curated gardens, shaded walkways, water features, or the framing of existing natural scenery, landscape plays a decisive role in shaping guest perception and brand identity.

The non-physical product is the service experience:

• Service culture and consistency

• Staff competence and availability

• Operational procedures and systems

• Speed, accuracy, and emotional engagement

  
  

Industry experience consistently shows that service quality cannot outperform physical constraints for long, and physical excellence alone cannot compensate for weak service delivery. A good hotel aligns its physical environment—including architecture and landscape—with its human systems so that service can be delivered efficiently, intuitively, and sustainably.

Front of House and Back of House: The Invisible Balance

Guests primarily interact with Front of House (FOH) areas such as lobbies, guest rooms, restaurants, meeting spaces, and recreational facilities. However, the true engine of hotel performance lies equally in the Back of House (BOH)—kitchens, storage areas, laundry, engineering spaces, administrative offices, staff facilities, and service corridors.

One of the most frequent causes of operational inefficiency is the underestimation or poor planning of BOH spaces. Common consequences include crossing of guest and service circulation, insufficient storage, service delays, noise disturbance, and staff fatigue.

A good hotel treats BOH as an equal partner to FOH. Logical adjacencies, adequate space allocation, efficient service flows, and proper staff amenities are not luxuries; they are prerequisites for operational excellence and consistent guest satisfaction.

Design Quality as a Competitive Strategy

Design quality is not an artistic indulgence—it is a business strategy. Hotels with generic design tend to compete primarily on price. Hotels with strong identity and thoughtful design compete on value.

High-quality design achieves several objectives simultaneously:

• Creates memorability and emotional connection

• Supports intuitive guest movement

• Reduces operational friction

• Improves long-term durability and lifecycle cost

  
  

A well-designed hotel remains relevant longer, adapts more easily to market changes, and sustains its positioning against competitors.

Efficiency: The Silent Profit Driver

Operational efficiency is one of the least visible but most critical indicators of a good hotel. One commonly used benchmark is Gross Floor Area (GFA) per room, which reflects how effectively space is utilized.

Efficient hotels strike a careful balance between guest comfort, operational flow, construction cost, and maintenance burden. Overbuilding public spaces or undersizing back-of-house areas both create long-term inefficiencies. Similarly, complex building shapes increase construction and operating costs without necessarily enhancing guest experience.

A good hotel is not defined by size, but by proportion and logic.

Facilities Must Match Market Positioning

A common mistake in hotel development is providing facilities that do not align with the hotel’s class, location, or target market. Every additional facility increases capital expenditure, operating cost, staffing requirements, and management complexity.

Well-performing hotels demonstrate discipline. Budget hotels do not require ballrooms. Business-oriented hotels do not require excessive leisure facilities. Standard rooms in urban business hotels do not require bathtubs. Facilities should be driven by real demand, not aspiration.

The same principle applies to room typology. While many projects introduce numerous room categories, industry practice shows that two or three room types usually generate the majority of room revenue. Excessive room types add complexity without delivering proportional financial returns.

Human Resources: The Living System

Hotels are service businesses delivered by people. No design, system, or technology can compensate for poorly trained or insufficiently supported staff.

A good hotel:

• Maintains appropriate staff-to-room ratios

• Invests in training and operational clarity

• Provides functional and dignified staff facilities

• Aligns payroll cost with service expectations

  
  

When staff workflows are efficient and supported by the building design, service quality becomes consistent rather than dependent on individual effort.

Financial Logic and Investment Reality

From an investment perspective, a good hotel respects financial fundamentals. A commonly used rule of thumb suggests that sustainable average room rates should approximate one-thousandth of the investment cost per room. Ignoring this relationship often results in assets that struggle to achieve acceptable returns.

Profitability varies by hotel class. Lower-tier hotels often achieve higher operating margins due to simpler service models, while higher-tier hotels require larger investment and longer payback periods but offer stronger branding and asset value.

A good hotel aligns product ambition with market pricing power, avoiding mismatches that erode long-term performance.

Context and Ecosystem Matter

Hotels do not operate in isolation. Location, accessibility, surrounding demand generators, and urban integration significantly influence success. Hotels within mixed-use developments often benefit from captive demand, shared infrastructure, and enhanced destination appeal.

A good hotel understands its ecosystem and positions itself as part of a broader experience rather than a standalone object.

Conclusion: A Good Hotel Is a Balanced System

A good hotel is not defined by luxury alone, nor by efficiency alone. It is defined by balance.

Balance between design and operations.Balance between physical product—including landscape—and service delivery.Balance between investment cost and revenue potential.Balance between guest expectations and operational reality.

When architecture supports service, service supports revenue, and revenue supports sustainability, a hotel becomes more than a building—it becomes a resilient, high-performing business asset. That alignment, achieved through knowledge, discipline, and experience, is ultimately what makes a good hotel.

Author

Ojahan Oppusunggu

Director of Technical & TechnologyArtotel Group