Three large factors are aligning for increased activity in hotel renovations that owners, investors, and lenders should be aware of as they strategize for capital improvements and renovations.
- First, many hotels have been deferring required renovations during the course of the pandemic. Due to these delays, Cycle and PIP renovations originally scheduled for 2020 will still need to be completed in addition to work planned for 2021.
- Secondly, the combination of increasingly distressed assets in a financial environment with a lot of dry capital will likely lead to a series of properties being repositioned, renovated, and rebranded. Historically low interest rates are fuel to the fire.
- Thirdly, travel should become safer as 2021 progresses, however, the industry may not have an immediate turnaround. HVS president and CEO Stephen Rushmore Jr. notes that, “We’re reasonably confident that the next six to seven months will be really tough for hotels,” he said. “There is no sugarcoating it. Hold on tightly. But things will get significantly better and travel will recover quite aggressively.” https://bit.ly/39JGnYL
The best way to get in front of this is to start planning. Our team sees the below three steps as the best approach to get back on track in the wake of the pandemic.
- Engage design and procurement teams and get brand approvals. The sooner owners and investors are able to release FF&E POs and bid out construction documents the better they will be. Get your projects ready for the hammer and your FF&E orders lined up.
- Look to source FF&E locally. The supply chain has been disrupted by COVID and as a result many orders are slow getting through port. Local manufactures will be busy though!
- Plan work for earlier in the year. General Contractors are very busy pricing projects and helping owners get ready to renovate. Owners will have better access to labor if they plan work earlier in the year. Getting ahead of Thanksgiving 2021 will be key.