Send a summary and link to this article To Email Your Name Your Email Bot Test To pass the Bot Test, please type the white text that you see in the gray box. This helps us prevent spammers from abusing the system.

Printable Version

Redesign on a Dime Sure you need to renovated, but how can you do it without breaking the bank. Thursday, May 20, 2010 Glenn Haussman

bookmark this We are on Twitter @hotelinteractiv

Here’s something that’s not shocking: There are a lot of distressed hotels out there. And many of those underperforming and over-leveraged assets are on the precipice of foreclosure, or will be taken to market and most likely sold for below-market value.

While that sounds good for those eventually acquiring the properties -- or in the case of the banks, operating them for up to a few years first before selling them – these properties are not typically in tiptop shape, since struggling ownership traditionally slashes CapEx expenses in times of dire financial straits.

“So many hotels are capital-starved, yet they need to spend in order to stay alive,” said Roger Hill II of the Gettys Group.

But dollar for dollar, the available capital being infused into hotels is significantly less than a few years ago. The end result will be renovations done for a fraction of what would have been spent previously. And it’s going to push designers and architects to get more creative about how to not only get the job done, but also to create the same impact on guest experience.

At this year’s HD Expo in Las Vegas, a discussion focused on this specific issue of how hotels that have been in desperate need of rejuvenation can be made into market leaders with fewer dollars invested.

“You have to be more judicious on where you spend. When we reposition a property, we look at the bits and pieces in hotels and think about where is biggest impact we could make,” said Ron Kolar with Tishman. “You have to focus on what makes the transition from this being a 20-year-old property to how you bring it around in viable way without breaking the bank. Budgets are simply no longer there. It’s easy to make $1 million look great, but those that make $100,000 look great are really [excellent] designs.”

Kolar said it’s best to focus most on areas that are most important to the guest…areas like FF&E, for example, or the lobby to create a great arrival experience.

Another long-term cost saving can be generated by installing tile in some areas rather than carpet.  While more expensive at first, tile won’t need to be replaced like carpet so it will save money over the long run. He also suggested creating “rather timeless interiors.”

“We don’t use of-the-moment colors. You box yourself in like that. We all remember avocado green, so keep it as neutral as possible for helping future renovations,” said Kolar. “When you think, try to do timeless clean design so a room can be easily refreshed. A room doesn’t have to reinvent the wheel or reek of 2010. After what we experienced in the last three years, people are not willing to go out on limb with design as they once were. They want to make sure they get $2 impact for every dollar spent.”

Kolar said they also take the tops off armoires when replacing tube TVs with flat panel models, which delays replacement for another three to four years.

John Boettger of Hilton Worldwide said designers will have a lot of opportunity to roll out these more rational renovation ideas as many hotels change flags during the next few years and more distressed assets get repositioned to better reflect market realities.

“Owners have had to ration capital expenditures. But many are at a point where their hotels haven’t seen substantial CapEx and are at point where they require major renovation. I know you will start to see that recover this year and accelerate into next year. Owners will be compelled because of the [lack of] quality of their product and market comeback. If they don’t renovate they could lose market position,” said Boettger.

Kolar said it all comes down to working smarter than in past years. He wants to see lower-cost fabrics, for example, and instead of suggesting custom products he thinks designers should focus more on getting pieces out of catalogs. “Don’t show me something I can’t afford. It is a waste of your time and you will have to revisit product and not get paid. Forget custom; the reality is, if they made it they made it 100 times and worked the kinks out. Creativity is not about being totally unique; it is about assembling things and places in a pleasant manner on time and on budget. People have to learn to be smarter about approaching projects.”

Boettger also warned architects and designers that, while work is returning for them, they won’t be able to charge extravagant fees. “We will have work for you, but we lost 15-25 percent on room rates and now we can only get back 5-6 percent a year. That means you are in a more competitive environment going forward than you have been in while, but at least there is work out there.,” said Boettger.