In The News

“Bleisure travelers straddle the line between the two major hotel traveler segments — business and leisure — and accordingly, they utilize the majority of amenities a hotel has to offer. They see a hotel as both a workstation and an escape, and can tell when a designer is resigned to one world or the other. Their equal desires for work and play can help hotels isolate some of the most impactful elements for design overhauls.”

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New year, new PIPs... new delaysStephen Siegel – 04/24

“Delayed PIPs are often welcomed by hoteliers, but this extra time between refreshes can be a double-edged sword. The longer a property goes without a refresh, the more tired it can appear. Realistically, costs are also resisting pressures to lower. If hoteliers are hesitant to address PIPs due to concerns about pricing, waiting them out isn’t going to help their situation. Instead, it will widen the guest experience gap between their hotels and their competitors’.”

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“In today’s development climate, there is no such thing as “too early” when it comes to project planning. Hoteliers are advised to engage with developers armed with a five-year capitalization plan and a willingness to engage with consultants in a way that keeps them fully informed when new projects are on the table. The more operators squeeze their development timelines, the more likely they are to stress their available funding, consultants and, ultimately, project success. In that sense, time is quite literally money in today’s development market.”

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“The greatest mistake many operators are making today is failing to bring these concerns to their branded partners for fear of an adverse reaction. For example, just because a hotel guestroom’s soft goods are 6 years old, does it need to be replaced within the next cycle, typically seven years, on a select-service asset? In most cases, considering the lower guest activity during the height of the pandemic, keeping them is worth consideration.”

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“The return to high interest rates is the most recent trend influencing hoteliers’ development decisions, but ownerships have as much reason for positivity in the current climate.”

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“Hoteliers have many reasons to delay or defer investing in a property improvement plan, or PIP, but a shaky economy is at the top of the list.”

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“Owners should drive to push for projects to be finished, not further delays, even amid the rising cost of debt and uncertainty about a potential economic recession on the horizon. ”

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“To me, hospitality is placemaking.”

“It’s refreshing to watch developers and operators alike take a deep breath as they survey the landscape as it has emerged—changed, possibly forever, but stable. Fortunately, the hotel industry is used to adapting to new things, and it’s time to get to work.”

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“Finding ways to plan around the increased cost of debt will require hoteliers to monitor their costs very closely over the next six to eight months. Success at this point is determined by how well you can time your reentry into construction.”

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“Business, leisure, and the newly-dubbed bleisure travelers are seeking opportunities to incorporate wellness into their routines and subsequently, are looking for hotels offering elevated wellness amenities.”

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“During the due diligence phase, some challenges are not always easy to discover and identifying them requires detailed investigation of a hotel’s physical condition, historic capital expenses and understanding costs of the anticipated planned improvements.”

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“Buyers should hire the right consultants who have knowledge of the market and others who can fully examine the asset as well as perform focused inspections. While this is not always popular with the seller, it is an important part of the due diligence effort, and excessive pushback can alert buyers to the potential of a hidden pitfalls within the asset.”

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“Teams of contractors used are from all over the country, not just local, and because of the lower hotel occupancies right now, the company can give them rooms on-site or at extended-stay properties .”

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“By and large, hotel brands have accommodated owners’ needs during the pandemic with regards to PIPs .”

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“Throughout the dog days of the pandemic, brands gave hotels the flexibility to avoid some of the more costly aspects of renovations.”

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“With many construction and renovation projects from early 2020 still postponed until more concrete economic recovery takes off, timing is everything”

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Risks Remain for Hotel Owners Willing to Dive Back Into Development

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