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With new hotel supply and competition from non-traditional lodging options looming in some markets, independent hoteliers are competing by planning to invest money in renovations, technology upgrades and even labor in 2019.

Primary Category: Independent Insights

Secondary Categories: Independents, News, Ownership

GLOBAL REPORT—Whether it’s spending money on renovations, upgrading Wi-Fi and other technologies or adding employees where needed, independent hoteliers are prepared to spend money in 2019 to stay on top of demand and continue to bring in new guests.

“Renovations will especially be an area that independent properties will need to spend money on, to keep up with their branded counterparts,” said David Sangree, president of Hotel & Leisure Advisors, a hospitality industry consulting firm. “Another major capital expenditure we will see in these hotels next year will be better, faster Wi-Fi that guests are expecting.”

The renovation wave
The boutique 116-room Hotel Chicago West Loop will complete a variety of renovations in 2019 that began this year, said GM Juan Monroig. The exterior of the 1920s-era building will be renovated at a cost of $200,000. In addition, guestrooms will be updated with paint, new flat-screen TVs, blackout shades and more, to the tune of $250,000. Monroig said the hotel also will spend $20,000 on new carpeting later in the year.

In terms of employee costs, Monroig said that by bringing some contract labor positions in-house—like housekeeping—the company will spend between $50,000 to $100,000, but will have a net positive effect in the long run.

“We think by doing this with our staff, there will be more consistency and efficiency,” he said.

Independent hotels that might have put off renovations during tougher economic times a decade ago now are embarking more on major projects, said Vikram Sood, SVP of operations at RAR Hospitality, which has both branded and independent hotels.

A $2.5-million renovation of the management company’s Carlsbad by the Sea Hotel in Carlsbad, California, will complete next year. The project includes new softgoods in the 147 guestrooms, some new FF&E, a renovated lobby and the addition of a 10,000-square-foot food hall with 14 vendors. RAR is also looking to do at a new website and new integrated revenue-management system for the hotel.

“There are lots of branded hotels in Carlsbad, and these renovations will allow us to stand out in the market from the others,” said Robert Rauch, CEO and founder of RAR Hospitality.

RAR also is starting in 2019 a $2-million renovation of its independent Lafayette Hotel San Diego, that will include upgraded guestrooms, a new lobby, some renovations to the restaurant and a new revenue-management system, Sood said.

Independents often have to work harder than brands in their markets to build up loyalty, making it even more important that they stay up-to-date and fresh, Sood said.

“The competition is renovating, so we need to be competitive and renovate as well,” said Ellen Ruane, GM of the Founders Inn and Spa, Tapestry Collection by Hilton, in Virginia Beach, Virginia.

The hotel will undergo a $7-million refurbishment that will start next year, including renovation of the 240 guestrooms, building a 40-seat bar right off the lobby, putting in new chairs in the restaurant and adding a permanent tent that will serve as a space for outdoor events.

The indie renovation movement extends to major resort destinations around the world as well. St. Lucia’s Bay Gardens Resorts will spend more than $1 million in renovations and upgrades to the company’s four hotels on St. Lucia, including guestroom refurbishments and Wi-Fi upgrades.

“Hotel brands are more and more dominant. If you don’t renovate, you will fall behind as an independent hotel,” said Sanovnik Destang, executive director of Bay Gardens Resorts.

Beyond renovations
Even new independent hotels that don’t need renovations yet are planning investments in 2019 to continue offering new experiences to guests and staff up to meet demand.

Sam Gelin, who developed and opened the 108-room Made Hotel in September 2017 in Manhattan, will be offering regular curated rotating art exhibits in 2019.

“New hotels are opening in New York City every day. We want to stay relevant and create new experiences that guests can’t get anywhere else,” Gelin said. “When guests select an independent hotel, they are looking for an enhanced guest experience.”

And ongoing CapEx for independents expands around the world as well. Over the past 18 months, the 129-room Flemings Mayfair London created new positions, including a front of house manager role and most recently, a financial controller, said GM Henrik Muehle. Next year, the hotel will continue investing in front of house roles as the business grows.

“These team members are key to ensure the consistency of our standards across the hotel in terms of guest’s satisfaction,” Muehle said. “For our part, having spent £20 million ($25.2 million) between 2014 and 2016, we foresee no major expenditure in 2019; however, we will continue to invest and maintain the property infrastructure and guest areas to ensure that we remain competitive in the current market.”

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Headline: Renos, infrastructure focus of indie spending in 2019

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