Hotel Maintenance: Four Key Areas That will Increase Property Value
By Fred B. Roedel, III Partner & Managing Member, Roedel Companies, LLC | April 24, 2011
To maximize the return potential of a hotel investment requires a number of factors to come together. They include building a good building in a good market, developing positive free cash flow via strategic operations and last but not least, maintaining the asset.
The current and long-term value of a hotel asset is ultimately a function of its ability to reliably and consistently produce positive free cash flow. As we all know free cash flow is simply a function of revenues and expenses. If a hotel is not well maintained it will not be able to be a market leader in rate and its operating expenses will ultimately increase.
A proactive maintenance program doesn't have to be all encompassing all the time, but is a key element when it comes to maintaining the value of a hotel asset. The four maintenance areas we consistently focus on are:
1. Exterior Envelope
If you are a boater then you know there is nothing worse than a boat that leaks. It takes all the fun out of the experience. The same is absolutely true for any building, including hotels. The damage and issues that can result from moisture are well documented and the costs to correct and fix moisture damage can be daunting. About three years ago we were hired to work on a hotel that had moisture issues in the exterior walls. After a significant amount of time and energy was spent investigating the issue, it was agreed that it could only be corrected by opening up all the exterior wall areas, replacing approximately 50% of the steel studs and installing both a new exterior wall and a new interior wall. Had the hotel been well maintained such actions would have been unnecessary.
When we inspect hotels' envelopes we investigate the following areas: