Renovate Now and Reap the Benefits Later
By Roger G. Hill Chief Executive Officer & Chairman, The Gettys Group Inc. | June 04, 2010
We have all heard it, and quite frankly said it, 2009 was a challenging year. The good news is we have all made it to 2010, but what now? While there are many signs that the economy is beginning to stabilize and move forward, we still have not seen an influx of capital into the market. There are certainly no new build projects, and a select few renovation projects that are moving forward in the current economy. With everyone still waiting to renovate and the industry is off to a slow start to the next cycle in the process, we ask ourselves - why not renovate now?
There are so many advantages to getting a head start on a renovation of your property; whether it is from savings on renovation costs due to supply dominating over demand when it comes to labor and construction, reduced guest displacement within the hotel due to lower occupancy and extending hospitable actions to just beating your competition to the market by coming out with a refreshed property ready and poised for increased average daily rates (ADR) in twenty-ten.
Renovation costs continue to remain low but that will soon change as the number of new-build and renovation projects are on the rise. While labor in the construction trade industry remains available and in abundance and costs are more aggressive than they have been in years, the price of goods and materials will soon start to increase. Many manufacturing companies have shutdown production facilities and carry little or even no inventory. A small pick-up in the construction industry will make products and materials much more difficult to obtain and lead-times will grow quickly. The global demand will put pressure on availability, therefore leading to an increase in pricing.
Guest displacement is so often an overlooked byproduct of hotel property renovations. At the nucleus of what our industry is centered around; hospitality and graciousness, we should strongly consider the benefits to not only our project, but also your staff and hotel guests. By renovating during a lower occupancy period, you will not displace guests and, more importantly, you will not inconvenience the guests that are in-house. By all of these actions while going through a renovation, you as the owner or manager will have both direct and indirect results in repeat business and a successful property. Even in today's economy, guests are still looking for an experience they do not have at home- a getaway from the everyday routine. Surprisingly they are willing to pay for such escapes, too.
Also, by having a larger area of the property available for renovation at one time allows the General Contractor to be more efficient, lowering your costs and property area downtimes. This works in your favor when it comes to two areas of benefit, as discussed above: renovation labor costs and guest displacement.
Many properties have had very little capital invested in them over the last few years due to the economic situation. By renovating now, you can beat your competition to market with a new and refreshed product. Typical design and renovation cycles can take anywhere from six to twelve months in time to complete depending on the scope of work and services. By starting a renovation project now, you and your property will be very well positioned to take advantage of the upturn in the tourism industry, which is upon us, and provide a superior product to your guest.