Hotel guests hate disruptions. There’s nothing more frustrating for a guest than choosing a hotel based on amenities like a pool, gym or on-site restaurant only to find out at check-in that one or more of those amenities is not available. Nothing more frustrating, that is, besides construction noise when they’re trying to work or relax.
That’s why, at the onset of the pandemic, some hotel ownership groups seized the opportunity to execute property improvement plans early and take advantage of low (or no) occupancy rates. The majority of hotel managers, however, didn’t have ready access to capital or were forced to use renovation reserves to stay afloat. Even as the pandemic waned, these groups were forced to defer renovations further due to supply chain bottlenecks and higher costs for everything from lumber to labor.
More recently, another kind of opportunity—the chance to maximize revenue and rebuild their coffers—has compelled hotel managers to defer PIPs even further. Hotel occupancy is still below pre-pandemic levels, according to the American Hotel & Lodging Association, but spending by guests is almost 24% higher than in 2019. According to data from CoStar, average daily rate and revenue per available room hit record highs in 2023. In other words, this is not a good time for hotel managers to be taking rooms offline, no matter how urgent the need for renovations.
So how do hotels deal with the backlog of renovations needed to bring their properties back up to snuff? Here’s a look at some efficient strategies hotel managers have come up with to get needed renovations done while maintaining seamless operations that meet guest expectations.
Revive or Revise?
One of the first questions hotel managers have to ask themselves when they get serious about tackling deferred PIPs is whether to stick with plans that may have been written up years ago or start fresh. The main factor to consider when answering this question is the extent and nature of those renovations. Plans for soft renovations—like replacing carpets, curtains and linens—are often evergreen, since the number and size of windows and beds and the square footage of floor space is unlikely to have changed since the last refresh.
It's when managers start looking at more substantial “hard” renovations, like furniture replacements or bath-to-shower conversions, that old PIPs can really show their age. The pace of change in guest preferences, technology and materials means that even hard renovation plans developed just before the pandemic are now largely outdated.
The challenge facing most managers, however, is that their normal cadence of soft and hard renovations has been upended, meaning that their properties are sorely in need of both. Many properties will soon have no choice but to forge ahead with occupied renovations. Hard renovations generally include a soft renovation in alignment, as soft renovations are twice as frequent as hard renovations.
The Complexity of Rebuilding a Full House
The process of renovating a hotel while it continues to welcome and accommodate guests is complex because it blends two distinct operations that are in conflict with each other. Construction crews want to get their job done as quickly as possible and without impediments. On the other hand, hotel operators cater to guests whose expectations do not include noise, dust, and outages to power and water.
After deferring PIPs for two years due to the pandemic and another two years to take advantage of pent-up demand, renovations are now even more complex to execute. Managers need a partner who can help them figure out how to receive necessary approvals, procure and handle materials, and sequence their installation in a quick enough manner that the renovation is effective but still protects revenue.
Guest safety and satisfaction must be top of mind throughout this process. While keeping guests separated from work zones and safe from hazards is non-negotiable, it’s impossible to undertake occupied renovations without some disruption to guests. The goal is to minimize that impact, and the best way to do that is through clear communication, both between contractors and hotel stakeholders, and between the hotel and guests.
Before commencing work, it’s important to understand the priorities of the operations team. That includes planning major elements, like core drilling new shower drains, for slower times of the year. If it’s impossible to fit the full scope of the required renovations into that slow period, it may be necessary to split the project up into sections that can be executed while limiting the impacts on overall guest experience during busier hotel seasons.
Communication is not a one-and-done thing. It’s crucial to maintain contact with the operations team on a daily base at minimum, as conditions and expectations can change swiftly on both the construction and operations sides. Making sure the general contractor participates in daily general manager meetings is a good way to accomplish that. From there, it’s incumbent on the operations team to make sure guests are informed and have the opportunity to move to a different room or otherwise have their concerns about any inconvenience addressed.
Gaps in that communication can have dire consequences. For example, while it may seem ideal to plan a required power outage for the middle of the night, that would be a rude awakening for guests who rely on powered medical devices to help them sleep. Giving them an opportunity to change to an unaffected room, however, can prevent a customer service disaster.
Hard renovations can be unpredictable and reactionary, and the downstream impacts of renovation work on guests are not always obvious or straightforward. There’s a lot more risk involved in major renovations, which requires both sides—construction and operations—to elevate their game and have someone in charge to provide the thought leadership and roadmap to make sure the project stays on track while maximizing guest and staff safety and protecting revenue.
Most hotel managers have deferred PIPs for four years or more, and their properties are starting to show it. The options of deferral and extension by brands have evaporated. In fact, 72 percent of respondents to a recent AHLA survey said they plan to maintain or increase their number of hotel stays this year versus 2023.
But with an innovative, strategic approach and the right partner to help guide them through the process, hotel managers can get their PIPs back on track while maintaining seamless operations and meeting guest expectations.