Property Improvement Plans (PIPs) are notoriously vague and difficult to interpret, especially when evaluating how Brand requirements relate to a property.  It is therefore critical to carefully read and review the PIP prior to creating a detailed scope and budget for your PIP renovation project.  Once the scope has been established, there are a lot of great tools to help calculate construction costs, and there are best practices to help projects stay on track and budget.  Here are some guides that we use when working with owners on their PIP projects.

Read the PIP Thoroughly.

PIPs use generalized language to describe the scope: replace casegoods older than seven years; implement the current décor package; or the dreaded restore to “like new” condition.   For each line in the PIP, we create an associated scope item.  How old are the casegoods and can a desk, table, or dresser last another renovation cycle?  What are the requirements of the décor package: new carpet, new wall coverings, reconfigured bathroom?  And what needs to be done to make a vanity, seating, casegood, or another element “like new?”   Looking at these details and the Brand Design Package are critical to creating a comprehensive scope of work.  Creating the scope will also help you identify PIP items that might warrant brand waivers.  PIPs are not perfect.  Negotiate

Estimating Construction.

With a scope defined, you can develop an estimate of probable costs. Many contractors are willing to provide an estimate based on your scope, but these numbers are rarely comprehensive, and must be understood as only for construction costs.  Also, a contractor will only price what is in the scope and an initial rough order of magnitude cost can miss soft costs and FF&E.  We develop project specific cost estimates as a guide to keep projects on budget. It takes a little extra effort but can save thousands of dollars by the end of the project.  If you don’t know construction costs, there are a few hotel specific pricing guides that can give per key costs.   Be careful though, not all hotel rooms are identical, even within a brand.

Best Practices.

Construction costs get most of the attention as they are the biggest piece of the budget, but it is equally important to allow for “soft” costs for architects, designers, engineers, lawyers, project managers, and other consultants that you may use.  Many owners want to keep soft costs as low as possible but be careful not to limit design and planning at the price of missing construction costs or extending your displacement while waiting for materials.  Most brands can help you identify FF&E budgets, but make sure taxes, freight, warehousing, delivery, and installation are all accounted for.  These add up to significant dollars.  Lastly, always carry owner’s contingency.  Unforeseen conditions are unavoidable, and you should be prepared to address them when they arise.

Learn more about PIPs in Watchdog’s Video Series, Pioneers of Real Estate Project Management.


Oliver Carley

Oliver Carley has a wealth of experience in the hospitality industry. Over the course of his career he has worked with the nation’s top developers and REITs on projects renovating and building hotels ranging from $250,000 to $80 million. Having experience with brands such as Marriott, Hilton, and Hyatt, Oliver has earned the reputation of a diligent project manager.


Masters of City Planning, ACIP*, PP*