U.S. travel market is on track for recovery and hoteliers are going to have to take the good with the bad. Hotel brands that delayed or altered product improvement plans in light of the pandemic are going to want to get their properties back on track—and who can blame them?
By and large, hotel brands have accommodated owners’ needs during the pandemic with regard to PIPs, particularly for hotel purchases made throughout 2020. During this period, expectations for investments have been adjusted based on a hotel’s condition and quality scores. Other hotels have been able to buy time away from renovations by delaying them as much as 24 months.
With economic recovery just coming into sight, hotel companies are starting to suggest to ownerships to review the timing to complete their required PIPs. The goal here is to minimize displacement in advance of the travel surge expected from pent up demand.
However, owners must consider the limited supply of hotel furniture, fixtures and equipment in the market when planning long-term PIPs. There is starting to be a pent-up demand for product hitting the lodging industry, causing a shortage of key materials such as foam for seating, lumber, and steel and driving up costs.
This rush of demand, coupled with disruptions in global shipping and other delays, has resulted in wait times as long as six to nine months for some products. Hotels seriously considering a PIP in 2021 and the beginning of 2022 are advised to lock in prices as soon as possible in order to avoid taking on additional costs in such an unpredictable market.
It’s too early to say how long it will take for the U.S. to recover from the pandemic, but hotels are beginning to open up to accommodate a level of pent-up demand that is impossible to ignore. In an ideal scenario, hoteliers would be able to wait out the pandemic and hold off on completing updates until the dust settles, but with so much riding on the unknown this is not viable for sustainable success.
Travelers prefer to stay in new rooms, and everyone in the industry will feel the repercussions of what takes place between now and full recovery. With so much to look forward to, it’s time to take this period of recovery seriously.
Stephen Siegel is principal of H-CPM, a construction project manager and owner representation firm.