In an environment where interest rates continue to impact priorities, shifting focus away from capex improvement and towards deploying capital in order to cover debt costs, many assets aren’t getting the face-lifts they desperately need. However, these face-lifts may be exactly what’s needed to improve the value of these assets and jumpstart the transactions market. But the question remains: how to deploy capex, measure it and manage it effectively in order to get the most bang for your buck?
The End Goal
Experts say it’s of the utmost importance that the end result not just improve the effectiveness of the hotel operations but also give the feeling of experiencing something special, thereby driving average daily rates.
“With guests preferences moving more and more towards experiences, especially in the luxury segment, we are seeing a greater allocation of capital expenditure towards experiential investments,” says Christian Bunte, managing director at Avingstone.
He adds that strategic capex allocation should be guided so that there’s an improvement in the market perception so that customers have a perceived value for the higher rates for example improving the experiential elements of a property as well as give protection to the asset in the event of any unforeseen shock to the sector.
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