Mr. Belmonte

Development & Construction

Renovation & Repositioning: Do your homework

By Steven Belmonte, CEO, Vimana Franchise Systems LLC

No matter what size or type of hotel you own/operate or what market you compete in, your answer most likely is "a lot more than I might be able to in today's competitive climate."

Ironically, few hotel owner/operators think in terms of extra roomnights needed to be sold when weighing the pros and cons of renovating a property and/or reflagging and repositioning it. This is just one reason why so many renovations and reflaggings fail to recoup an adequate return on investment and why capital markets for such projects today often are deemed too risky. These and dozens of other "cancers" are blackening what otherwise undoubtedly would be a much-brighter profitability picture for lodging.

Due diligence means 'do your homework,' which includes many steps along the road to success:

Step 1 is shelving your ego.

Gain strength through surrendering. Admit that you are not "the expert" and that an outside consultant with an unbiased view and proven technical expertise in these matters can save you considerable time, headaches and monies. At Hospitality Solutions, we have a saying: "The road in the U.S. lodging industry can be a difficult but prosperous journey. The shortest route to success is with someone who has led the way."

Step 2 is understanding the two primary scenarios that trigger the need for a renovation.

• Common sense tells you that your competitive stance in the marketplace is at risk. Your product is physically old and tired and the new kids on the block are eating your lunch; and/or
  
• The franchisor of your brand informs you that certain changes/upgrades must be made to your property to retain the flag and keep your product fresh and competitive.

Step 3 is doing the math and realizing what kind of a return you can conservatively expect in what period of time from a particular renovation and/or reflagging and repositioning.

Many who adequately and honestly do the math, and leave their pride at the door, will discover that the ROI will not be worth it and that there are other solutions better suited to bolster performance for their particular property. Many, I suspect, will decide to invest half or one-third of what they initially earmarked for a face-lift and instead will invest more in training, management and guest service improvements.

Step 4 is realizing that although the numbers might point toward a major renovation and/or reflagging, your financial wherewithal at this point might not make this feasible or the most fiscally responsible decision. Honestly accessing your access to capital is the fourth step.

Step 5 is getting maximum bang for your buck.

When buying and building, it's all about location, location location. When renovating, it's all about curb appeal, curb appeal and curb appeal. Studies have shown that more and more are traveling by car, leisure markets are picking up and consumers are becoming more savvy - all driving walk-in business like never before. Step 6 is embracing the fact that renovations and reflaggings often go hand in hand -even if it means the math doesn't work for you at this time. Almost always, to reflag, you will be renovating in some way, if not only to meet new brand standards and add new signage.

Step 7 is avoiding the trend toward leaving your franchising partner just because the road is rocky. Far too many reflaggings take place because owner/operators have managers who are asleep at the wheel and/or do not have the staff, technology and/or time to take full advantage of all of the services they have access to under their franchise agreement. Sure, sometimes a reflagging is necessary, but usually we can do a little investigation prior to contempt and get both parties to step further into the batter's box and hit one over the fence - saving a property tens to hundreds of thousands of dollars in liquidated damages, reflagging and renovation expenses, while saving the franchisor a satisfied licensee and an important revenue stream and referral source for years to come.

Step 8 is realizing that comatose management more often than not is the issue behind an underperforming property and that many major renovations can be forgone in many markets until day-to-day management and practices are where they need to be to bring you the occupancy, ADR and RevPAR needed to kick-start a serious renovation and repositioning.

So there you have it: 8 simple steps ... Remember, they're simple but not easy. If it were easy, you wouldn't be reading this column. You'd be out on your yacht or golfing in the Caribbean! We strongly suggest that you follow these eight steps and call a proven outside consultant such as Hospitality Solutions before spending hundreds of thousands or even millions of dollars. Again, these are just suggestions - much like we suggest you pull the rip cord when skydiving!

Vimana Franchise Systems LLC is a hotel franchise company owned by CEO Steve Belmonte, President Neal Jackson and Vice President Cory Jackson Jr. In May 2011, Vimana Franchise Systems launched the Centerstone brand as a three-segment franchise designed to create a fair and cost effective model for the hospitality industry. In November 2011, Key West Inns was re-launched under the Vimana Franchise ownership umbrella as a fun and uniquely themed leisure brand. For more information on Vimana Franchise Systems LLC, contact Steve Belmonte at (407) 654-5540 steve@vimanafs.com. Visit Vimana Franchise Systems online at www.VimanaFS.com. Visit Centerstone online at www.centerstonehotels.com, on Twitter at @Centerstonehtls, or on Facebook at www.facebook.com/Centerstonehotels. Visit Key West Inns online at www.staykeywesthotels.com, on Twitter at @StayKeyWest, or on Facebook at http://www.facebook.com/staykeywest. Mr. Belmonte can be contacted at 407-654-5540 or steve@centerstonehotels.com Extended Bio...

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