During May’s Choice Hotels International annual convention in Las Vegas, Raul Ramirez, the company’s chief segment and international operations officer, acknowledged a proverbial elephant in the room: Property improvement plans are necessary, but the economy is volatile. “I know this business environment hasn't made renovations and reinvestments easy,” he told attendees. “But you know that hotels are long-term investments, and the condition of the product is a critical part of the guest experience. Every single day, brand health matters.”
Renovations and property improvement plans are vital both to properties and to brands—and when they come due, hoteliers have a range of options. Here are three tips on how to get the most value from every dollar spent on a project.
1. Know What to Prioritize
Tom Kelley, CEO and president of Digney Holding Companies, believes the “most effective” way to start a project is by focusing on the elements that directly influence both guest perception and drive average daily rates or other on-premises sales. “In practice, that typically means prioritizing guestrooms—particularly finishes, lighting, bathrooms and case goods,” he said, noting that this also can include public space—“areas where brand and guests converge in their expectations.”
Kelley said he “consistently” sees over-investment in areas that don’t materially improve ADR on additional sales, such as back-of-house upgrades beyond code requirements or full replacements where refinishing or re-skinning would satisfy both brand and durability standards. “The discipline is not just in spending less—it’s in deploying capital where it changes outcomes,” he said. For example, at a luxury hotel, “closer attention to real materials, details and craftsmanship will resonate.” For properties that attract value-seeking guests, “expenditures focused on functionality and convenience typically see the highest return on investment.”
Rebecca Buchmeier, principal and hospitality leader, DLR Group, agreed that hoteliers need to prioritize elements that “add real value” and have a strong return on investment. “Not every item in a PIP needs equal focus, and some elements can be negotiated or scaled back while still achieving the same result,” she said, encouraging owners to “concentrate on high-impact spaces and look for opportunities to adjust or find alternatives for lower priority items.”
Some elements can make a big impact without costing a fortune. Cary Chandler, senior associate and project manager, DLR Group, noted that signage and branding are “high impact and relatively low cost,” helping create a strong first impression before guests even walk in. “Simple updates like improved lighting can make a noticeable difference right away,” he said.
Kelley agreed that both the quality and consistency of lighting is an important factor to remember, as are softgoods, carpet and wall finishes, refreshed headboards and a “cohesive” color palette—all of which can “transform a room without significant structural changes,” he said. “These are the types of interventions that guests notice immediately and that brands typically support.”
Jared Walker, president at InterMountain Renovations, noted the importance of focusing on high-traffic areas. Well-planned patterns and color schemes can help to hide wear and tear, he said, and while quality elements may cost more up front, “they can earn you years of life on the back-end of the cycle.”
2. Start Collaborating Early
Smart scheduling also can help save money on a renovation or PIP. Walker encouraged hoteliers to start working with their brands early and to bring contractors and designers into the conversation as early as possible to avoid budget overruns later on. “The design process through construction completion should be about 12-14 months depending on the duration of the actual construction portion,” he said.
Kelley agreed, and said that contractors and designers should be brought in “immediately after the PIP is issued, before scope assumptions have hardened into perceived requirements.” This, he argued, is “one of the most important ways to avoid cost overruns” on a project. “When the design and construction teams are brought in early, they can interpret the intent of the PIP rather than simply pricing it literally,” he said. This distinction is “critical,” he added, as it helps the team identify cost drivers, flag constructability risks and propose alternatives while there is still flexibility. If a team is brought on after design completion, he noted, value engineering becomes “reactive,” and cost reductions can come “at the expense of quality or schedule.”
“Much of the industry is wired for ‘Design, Bid, Build,’ and owners are mistaken in the value that brings them,” Kelley said. Bringing in a contractor early, running preconstruction budgets throughout the design process and negotiating directly with the contractor on the final budget “will always yield better results both in terms of execution quality and price point,” he argued.
Buchmeier emphasized that designers should be included in strategic planning, especially when negotiating the PIP with the brand. “Without a clear design vision, contractors may make assumptions that do not reflect the actual intent, which can lead to cost issues later,” she said. Once the plan is “more defined,” she continued, contractors can be brought in to “align pricing and execution with the established design direction.”
3. Expect the Unexpected
Certain elements in a PIP or renovation can drive costs higher than owners initially anticipate, and hoteliers should be ready to pay more for specific upgrades. For example, Kelley noted that bathroom renovations can become unexpectedly expensive if units and fixtures need to be relocated rather than working within the existing footprint. “Similarly, lighting upgrades often appear straightforward but can escalate quickly once controls, emergency systems and integration requirements are fully understood,” he said.
“Lighting replacements may seem straightforward in a PIP, but existing conditions of property can make upgrades more complex,” Buchmeier said, citing new wiring and relocations as challenges teams may face during the process. Still, she added, updating a lighting system can offer long-term returns on the investment through energy savings.
Another “common surprise,” Kelley said, is the “cascading impact” of upgrades to mechanical, electrical and plumbing elements, where a relatively cosmetic scope triggers broader system compliance.
“The key to managing these risks is early identification of what I would call ‘trigger points’—areas where touching one element activates a chain of additional scope,” Kelley said. Buchmeier added that realistic planning means “accounting for these complexities early and understanding both the upfront investment and long-term benefits.”
This article was originally published in the June/July edition of Hotel Management magazine. Subscribe here.