Lodging’s current robust performance is creating a competitive environment when it comes to product freshness. The industry fundamentals have never been better, and these conditions are driving a flurry of construction projects, rebranding and conversion activity, and renovations of every scope throughout the United States.
In the last three years, an estimated 1.2 million hotel rooms have been renovated, representing more than 20 percent of the existing supply, Lodging Econometrics (LE) data reveals. According to Bruce Ford, LE’s senior vice president and director of global business development, the number of renovations will likely trend downward as strong hotel operating profitability discourages owners from making rooms unavailable while being renovated. However, for those hoteliers willing to take the plunge and make some upgrades, here are some key takeaways for making the best renovation decisions for your bottom line.
Rule No. 1: Property Improvement Plans Are Never Cost Neutral
When Cicero’s Development Corp. gets involved in a hotel renovation project, it typically starts with a call from an owner who needs to conduct a property improvement plan (PIP). During the conversation, they discuss the budget and scope of the project and how they can align with the owner’s business plan. “In all cases, we say, ‘Give a range of prices you want us to fall in between,’” says founder Sam Cicero. “It has to be a conscious business decision.”
I recently finished reading Heads in Beds ~ A Reckless Memoir of Hotels, Hustles and So-Called Hospitality, by Jacob Tomsky.
I will get the disclaimers out of the way first: Mr. Tomsky can write – really well. He wrote about something he knows inside and out. While his course humor is not my style, he builds it and delivers on it impeccably. I loved his respectful nod to Brian Wilson. I can see someone wanting to make it into a movie because it is a mostly untouched topic and with the right Stars, this could become a successful satire (if only Ryan Gosling were 5 years younger). Heads in Beds could do for the Hotel Industry what The Nanny Diaries did for the Au Pair business. Continue reading →