Economic Trends

An end to ‘extend and pretend’

1 Nov, 2011 By: Andrew Sheivachman Hotel and Motel Management

Brands require a new focus on casegoods and curb appeal


Wyndham Hotel Group's Tryp by Wyndham brand includes the Hotel Tryp Cibeles in Madrid. Tryp hotels are located in Euroe and South America.

National Report–During and after the financial crisis of 2008, brands and owners alike scrambled to adjust previous renovation and property improvement plan commitments in order to remain profitable during a period of decreased demand and occupancy.

“Our process has drastically changed from just two years ago,” said Dino Pallotta, VP of brand support for Wyndham Hotel Group. “There were very finite PIP procedures. We did a good job protecting brand standards, but as the economy went south it was difficult for franchises to have a good value proposition.”

With his field team of 33 associates, Pallotta has worked to better assess the most impactful changes franchisees should adopt.

“Our biggest goal and challenge is that we want to protect our brand standards and have a good value proposition for franchisees, so they have return on their investment,” he said. “When we do a PIP, there are certain things that are no-brainers, meaning that they are brand-defining elements that are high impact for the guest. The two that come to mind are breakfast and bedding. We have different bedding packages across all brands and breakfast is the No. 1 amenity guests expect. We try to require those in a short period of time because that’s what is going to help a franchisee build [average daily rate] and [revenue per available room].”

Extra leniency is being granted industrywide to hotels looking to reposition, while a narrower focus on specific brand standards is emerging. PIPs are being closely and strategically monitored, as well, to help owners adapt to any changes in the economy.

“Right now if you’re an economy hotel with midmarket elements, where we’ve really relaxed our procedures under the right conditions is when it comes to [furniture, fixtures and equipment], carpeting, the lobby or high-capital items,” Pallotta said. “Even though when we do a PIP, they may not meet the existing brand standard. If they are in good shape conditionally we have gone from using the term ‘replace’ to using wording such as ‘refinish,’ ‘repair’ and ‘deep clean.’”

From a management perspective, decreasing the effect of a renovation on existing rooms during a repositioning can be vital to remaining competitive.

“At the beginning, it was really [about] what the owners wanted to do first and because of our relationship, we knew we had a certain plan in place to do it in three years,” said Jean-Marc Rousseau, GM of the Holiday Inn SunSpree Resort Montego Bay in Jamaica. “We should be officially rebranded by January 2012 as a new Holiday Inn, without the SunSpree title. Back in 2008, the owners bought the hotel from Holiday Inn and started making renovations to all the public areas and rooms.”

Efforts focused on casegoods and bathroom renovations at the 520-room beachfront resort in a crowded Jamaican leisure market.

“As a part of the rebranding to Holiday Inn, it was necessary in many ways to have the bathrooms renovated, retiled and old bathtubs made into showers,” Rousseau said. “The rebranding allows us to put in new showerheads, rods and curtains to enhance our property to brand standards. In the room itself, all the casegoods and linens have to be up to standards.”

Even though the resort is moving up in segment, Rousseau isn’t expecting to immediately begin raising rates under the new flag.

“We’ll push rate little by little, as competition is very fierce in the area,” he said. “You just can’t say it’s a new hotel because it’s a 41-year-old hotel that’s been revamped.”

From an owner’s perspective, managing improvements to reposition an existing property can open up new lines of business. After acquiring the Hotel Icon in Houston earlier this year, Canyon-Johnson Urban Funds upgraded the property to the level of the Marriott Autograph Collection.

“The property is actually in very good shape and had been renovated approximately three years ago,” said Richard Bosworth, managing partner at Canyon-Johnson Urban Funds. “This was not a distressed asset physically, as opportunistic investors will often seek out. We were able to convert to a Marriott Autograph affiliation very quickly by purely bringing up the property level. We replaced bedding and installed flatscreen TVs and contemporary technology. That was basically enough to flip the switch to Marriott.”

In an effort to appeal to a new type of guest, the Hotel Icon will update casegoods and curb appeal.

“We’ve embarked upon another nine-month renovation which primarily includes FF&E and cosmetic changes [to] the front of the house,” Bosworth said. “The property’s food-and-beverage operations had never really had a position within the local market or a committed identity. We’ve broken down whom our typical guest is, and the F&B in the lobby can become a center attraction for power lunches or power drinks. It’s a very simple business thesis with this hotel; it’s really about access to new channels of business.”

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