Three Rules of Renovation
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.”