Performance Measures Can Help Hotel Owners and Managers Select the Right Renovation Contractor

By Sam Cicero President, Cicero's Development Corp. | August 07, 2016

Understanding Performance Measures Can Help Hotel Owners and Managers Select the Right Hotel Renovation Contractor
When selecting renovation contractors, many hotel owners’ and property managers’ decisions are based solely on the bottom line. In short, the lowest price bidder wins.

Other hotel owners and managers, however, carefully consider the intricacies of their project’s scope and can assess the confidence they have in their selected contractor that the renovation can be finished on-time and on-budget. What these hotel owners appreciate that others don’t are the many value-added, non-financial advantages that a talented contractor brings to the project. For the purposes of this article I will refer to these advantages as “performance measures.”
Performance measures may prove to be imperative for the successful completion of a hotel renovation, although on the surface it is difficult to put a price tag on them. Key examples of contractor performance measures include:

  1. Business Disruption

    Avoidance Business disruption avoidance refers to the
    contractor’s ability to identify and categorize possible risks early on that
    could throw the project off schedule, resulting in cost overruns and guest
    dissatisfaction. The contractor should be able to draw up a detailed Risk
    Management Plan where the list of potential risks are identified. Each
    individual risk should be assigned a percentage of likelihood of happening,
    such as high, medium or low risk. At that point, the contractor needs to
    take any potential high-risk item and create a “what if” scenario including
    a work- around plan. One of the contractor’s employees should monitor this
    Risk Management Plan daily with specific guidelines as to where and when to
    alert the entire project team, including the hotel owner, should that
    particular risk occur. A successful Risk Management Plan greatly minimizes
    costly overruns and change orders.

  2. Qualify All Bidders

    The success of a project greatly relies upon the general
    contractor’s vetting of suppliers and subcontractors. It’s the contractor’s
    responsibility to ensure that suppliers and subcontractors alike have the
    same sense of value and dedication to the completion of a project as the
    contractor in charge. Professionalism, safety, good skill sets and
    communication, access to the right materials and supplies as well as respect
    for the owner, are all very important attributes when selections are made.
    Another key area of prequalification scrutiny is a subcontractor's financial
    data. General contractors may ask for particular details like annual
    contract volume, sales and net worth, or may request full financial
    statements. Another essential prequalification item is safety management
    history. General contractors should require that a sub's workers
    compensation experience modifier be 1.0 or lower, confirming that its loss
    experience has been on par with others. General contractors also may ask for
    Occupational Safety & Health Administration data such as illness/injury
    rates and lost workdays, along with information about a sub's own safety
    management programs and procedures. Work history, of course, is important,
    such as the type of work done, jobs completed or in progress and disputes
    over previous work. General contractors also should look at a
    subcontractor's schedule of upcoming jobs to be sure it is not overextended.

Coming up in January 2018...

Mobile Technology: Relentless Innovation

Technology has become a crucial component in attracting and retaining hotel guests, and the need to enhance a guest’s technology experience is driving a relentless pace of innovation. To meet and exceed guest expectations, 54% of hotels will spend more on technology in 2018, and mobile solutions in particular will top the list of capital investments. Many hotels are integrating mobile booking, mobile keys, mobile payments and mobile check-in into their operations. Other hotels are emphasizing the in-room experience, boosting bandwidth and upgrading flat screen TVs to more easily interface with guest mobile devices. And though not yet mainstream, there are many exciting technology developments on the near horizon. The Internet of Things (loT) is taking form in some places, and can be found in guest room control systems, voice activation systems, and in wearable sensors that can be used for access and payment options. Virtual reality headsets are available at some hotels so guests can enjoy virtual trips to exotic locations or if off-property, preview conference facilities and guest rooms. How long will it be before a hotel employs a fleet of robots for room service, or utilizes a hologram as a concierge, or installs gesture-controlled walls that feature interactive digital displays? Some hotels are already using augmented reality for translation services, or interactive wall maps, or even virtual décor. This pace of innovation is challenging property owners and brands to stay on top of the latest technology trends while still addressing current projects. The January Hotel Business Review will explore what some hotels are doing to maximize their opportunities in the mobile technology space.