It’s easy to let all of the moving parts of a hotel renovation become overwhelming. But, instead, take these steps into consideration if a large-scale project is on your property’s radar.
When it’s time to renovate, remember to ‘’expect the unexpected.” To minimize surprises, smart planning and preparation is the key to a successful renovation. These surprises have the potential to throw you wildly over budget and off schedule.
Here are some tips to make sure your next project is a success.
Define project scope
While it may seem surprisingly simple, many hotel owners do not think this critical component through. If not well conceived and defined, issues are certain to arise.
To determine scope, first decide your budget and timeline. Your budget will drive your scope and your schedule.
It’s important to acknowledge the amount of funds you have available and the most effective ways possible to provide maximum guest impact. This is accomplished by focusing on the expectations and outcome of the renovations.
Ask your operations team for their wish list. You may not be able achieve all their wants, but they’re intimately connected to the guest experience. They know their guests and can provide a list of what needs to be updated. From there, determine what’s essential, what is preferred and what is brand mandated.
If applicable, be sure to understand any brand requirement and acquire their approval before beginning the work. Submitting to the brand your design documents, other project initiatives and procuring their approvals in advance of the renovation will help prevent wasted efforts and possible added expense.
Budget and bid
It’s also important to acquire multiple bids on construction costs from reputable contractors. It would be ideal to utilize contractors who specialize in the hospitality sector. Contractors who are not familiar with the operations of a hotel could cost owners income in loss of operating revenue due to the contractor’s lack of experience in working in operating assets. Hospitality-specific contractors understand the nature of going from room to room, as well an inherent understanding of turning around groups of rooms efficiently and quickly.
In H-CPM’s (Hospitality Construction Project Management) experience, contractors less familiar with hotels tend to fall behind, causing the schedule to slip. We call this revenue displacement.
Remember, the longer a room is out of service, the more that costs the hotel’s bottom line.
In addition, when reviewing proposals, the lowest bid is not always the best deal. As part of your selection process, leveling the proposals is a significant step to confirm each contractor is quoting the same scope. Some contractors can perceive the scope differently than others even though the document identifies the work.
Plan for the unexpected
Be sure to set funds aside for soft costs such as architectural fees, procurement fees, project management fees and other applicable costs. Then include these fees into your overall budget to confirm there is enough capital to perform the scope.
No matter the renovation, it’s always essential to put additional funds (contingency) aside to cover unexpected costs and hidden conditions. The amount of funds that should set aside is based on the complexity and overall scope of the project.
If the project requires replacing finishes only, such as flooring, vinyl, lighting, art and seating, set aside 4% to 5%. However, when the scope involves more complex modifications such as converting bathtubs to showers, realigning spaces, structural upgrades and municipal permits, the contingency should be increased to as much as 10%.
It takes a plan
In most cases, if not operating or building an independent hotel, brand selection is a key starting point. For a new build or conversion, ownership along with the franchisor will need to determine if a market will support a particular brand. For a renovation, brands will have specified refresh requirements based on a property’s condition, age and current standards.
On the ownership side, the cost estimate or budget must be identified early on to determine if an acceptable return on investment can be achieved.
Integral to the ROI is project timing. A schedule puts into perspective timing for the entitlement process (if a new build), team selection, design and architectural specifications, project financing, procurement of FF&E, permitting, construction buildout and punch list acceptance. Factors such as weather conditions, disruptions to hotel operations and guest experience is critical when choosing the schedule.
Once the project scope, budget and schedule have been determined, ownership must select the team.
Building the team
Proper selection of the team is vital to a project’s success. It is important that all players possess extensive knowledge of the lodging industry, the brand being considered for the project and are able to work well collaboratively with other team members.
The first step in building this team is to issue request for proposals for each needed discipline. Key factors in selection (apart from budgetary considerations) include hospitality experience and being able to work within a team concept. Local knowledge is a bonus and influences several important functions, access to labor and the municipal approval process. If possible, interviewing applicants before they are engaged helps get a sense of their professionalism and understanding of the hospitality industry.
The teams will typically include roles such as a project/program manager, an architect, a designer, an engineer, a procurement group and a general contractor.
Finally, consistent communication with the design, procurement, construction and operating teams is essential. A project can take anywhere from a few months to several years and smart communication will keep everyone informed, eliminate challenges before they happen and keep the team engaged in the process.
Renovations can be an exciting and rewarding opportunity to better the guest experience and bring additional revenue to the asset. Following these simple rules will help provide this and allow owners to keep control of cost and minimize lost revenue.
Stephen Siegel is principal of H-CPM (Hospitality CPM) where he is responsible for managing his team of professionals in all aspects of renovations and construction. His experience and knowledge with managing projects is comprehensive; from the early planning stage to final completion. He is a proven professional in the areas of design, engineering, contractor negotiation and project management for new construction and renovation projects. He earned both a Bachelor’s and Master’s Degree in Construction Management from the University of Florida.
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