In 2021, value-enhancing ROI (return on investment) opportunities and accretive investments were a top priority for hoteliers, and this trend is likely to continue in 2022. During the third-quarter earnings, executives of hospitality REITs (real estate investment trusts) and publicly traded hotel firms revealed to business analysts that they had invested heavily in capital projects, including expensive renovations or conversions. Hotel chains and companies are also channeling their resources toward creating multiple growth channels through internal growth initiatives and capital recycling. Here is what some of the executives had to say:
Pebblebrook Hotel Trust completed a guest room renovation that cost $15 million in their Southernmost Beach Resort located in Key West. The last of the Trust's resorts will either be redeveloped and repositioned or fully renovated. The Trust has also made a $25 million investment in transforming the San Francisco-based Hotel Vitality into One Hotel. However, their efforts have been hampered by supply chain constraints in receiving (equipment, fixtures, and furniture) items.
RLJ Lodging Trust is renovating The Mandalay Beach. The Trust has also completed a model room design for Charleston and Santa Monica, and they'll embark on renovations shortly. RLJ has also made major strides toward creating multiple growth channels through internal growth initiatives and capital recycling, which will further strengthen RLJ's ability to increase EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) beyond what's expected in the cycle recovery.
By the end of 2021, Host Hotels & Resorts is expected to complete about 85 percent of Marriott's transformational capital initiative and fully complete the program by the close of 2022. Through the capital program, Host Hotels & Resorts will invest $1.2 billion in 21 assets.
Renovations are already complete at the New York Marriot Marquis. The renovation entailed a total upgrade of guestrooms, renovation of meeting space (over 140,000 sq), a new lobby with upgraded restaurants and new bars, and the extension of the establishment's skybridge line.
At the Florida-based Orlando World Center Marriot, Host Hotels & Resorts has completed renovations that included an updated lobby, bar, restaurant, and guest rooms. These comprehensive renovations of the firm's largest hotels are part of the transformation capital initiative. Of the 16 properties covered by the Marriot capital program, ten are now complete.
Host Hotels & Resorts limited business interruptions by undertaking the projects during the height of the COVID-19 pandemic. Consequently, they are poised to capture significant market share during the recovery. In addition to the Marriot capital program, Host Hotels & Resorts also recently completed significant guestroom renovations at their Florida-based establishment, Hyatt Regency Coconut Point. The hotel firm expects incremental EBITDA amounting to up to $35 million from the ongoing and the completed ROI development projects.
Many other hotel companies have made massive investments in revamping their properties. Despite the current supply chain bottlenecks, many experts expect the market recovery to accelerate in 2022. Therefore, you should prepare for it. To get started, contact Nikki Fox at ParkWest General Contractors at nikki@parkwestgc.com today. Our dedicated team is eager to assist you with your building renovation and upgrade needs.
