This is the final part in a series on PIPs in the hospitality industry. Click here for a link to part one.
For any PIP to reach completion on time and on budget, strict schedules are a necessity, and that schedule always comes down to money—specifically, how to maximize rooms revenue during the renovation, while having construction crews that can handle schedule shifts.
Craig Amos, EVP of capital investments for ownership company Apple REIT Cos., said the process of scheduling “involves some science and some art,” as owners and designers plan around low seasons and big events.
“The biggest problem is displacing business or running over schedule and then running into graduation weekend,” Amos said. “We can quantify the number of rooms out of service and what that will cost us and we can forecast our occupancy. What’s tougher to quantify is what business we lose when guests see a renovation and walk away.”
Here again, communication is key. Both Jonathan Nehmer, president of Jonathan Nehmer + Associates, and Sam Cicero Sr., founder of Cicero’s Development Corp., said they get general contractors involved as early in the scheduling and planning process as possible. Cicero has daily stand-up meetings during projects to keep the conversation going.
He said it’s also becoming more common to house construction crews off-site rather than in rooms, which can save all parties money while keeping more rooms in service.
Nehmer said that with more compression on time, money and product availability, he sees renovation scheduling changing to adapt start-stop timeframes.
“We see this happening in hot markets like Orlando,” he said. “We’re asked to work for a month, then go away for a month.”
While that start-stop schedule sounds crazy, Nehmer said it works when it’s planned well from the beginning.
From a brands perspective, Kurt Smith, VP of product quality and innovation for Hilton Worldwide’s focused-service brands, said that while start-stop renovations aren’t everyday occurrences, Hilton is comfortable working with owners to time the PIP to avoid busy times. “We traditionally used to write PIPs for 12 months, but we’ve stretched that out to 18 months, even 24 months or longer if necessary.”
With more properties involved in PIPs now that conditions are more favorable, product suppliers and procurement companies are feeling the pinch as well.
“We know that nobody likes to say ‘no,’ but we absolutely have to make sure everyone involved in the renovation is telling the truth when it comes to what they can deliver and when,” he said.
He said when his firm begins a renovation, he does a day-by-day schedule with the contractor on the first room, then applies those specs to the rest of the schedule.
Cicero works with his contractors to schedule how many workers are necessary for different parts of the job.
Relationships become a key part of keeping the schedule running when it comes to ordering and receiving materials.
“You can buy the same carpet made by a lot of different manufacturers,” Nehmer pointed out. “Your purchasing agent knows who has the time to produce it, the best price and the best delivery.”
Amos agreed. “It’s also about buying power and leverage with vendors,” he said. “If I call a carpet vendor because roll sizes are wrong, he might not take my call. But when the purchasing agent who has real clout makes the call, he gets through.”
These relationships don’t just expedite completion times, they can save money as well, Nehmer said, especially when ancillary costs and savings—like freight costs and utilities rebates—are factored in from the beginning.
“You don’t have to use a freight manager, but normally their fee is built into the fact that they’re going to save you 4 to 5 percent, and that’s a big chunk of change at the end of the day,” he said.