calculator and planning

Tips for a smart hotel capital expenditure project.

There are many reasons why a hotel might undertake a capital expenditure (CapEx) project.  For starters, owners might want to make periodic upgrades as part of a larger asset management plan, or the manager may simply be interested in making upgrades to the property.  Whatever the reason for the project, careful consideration is necessary to ensure that the investment pays off.  Here are some of the things you need to consider to ensure that your next capital improvement project is worthwhile.

  • Timing

When scheduling your CapEx project, there are several factors to take into account.  For instance, you need to consider how the work will impact your normal operations, how much revenue you stand to lose during the project, whether the work will increase your property value, and what your competitors are doing to enhance their properties. 

On top of these considerations, you also need to consider the scope of your project and the projected timeline for the work.  Currently, timelines for renovation projects are lengthening due to the ongoing labor shortage in the construction industry.  To ensure that the timing is right and that you have a team available for the work, 12-14 months of planning is necessary before actual construction work can begin.

  • Project Scope

You also need to consider the scope of your CapEx project.  When you go too big, you risk investing more than the upgrades make up for.  Going too small may not constitute a big enough change to increase your property value.  So, it’s important to make sure that your project is somewhere in between.   A good way to determine the scope of your project is by seeing what your competitors are doing to improve their properties.  By going slightly beyond what they are planning, you can be prudent and ensure that you are exceeding the bar without going too far.

  • Logistics

If a CapEx project is part of a master capital improvement plan, then it’s important to consider the project in terms of the property’s overall goals.  By looking ahead, you can determine if your plans need to be consolidated or separated into multiple projects.  When considering logistics, you also need to think about how you can accommodate deliveries, material distributions, storage, and the organization of labor.  It’s important to consider how you can keep hotel operations up and running while simultaneously ensuring that the project progresses.

These are some of the things to consider when planning your next CapEx project.  Do you need help with your hotel renovation project?  If so, then contact Nikki Fox at Parkwest General Contractors at Nikki@ParkwestGC.com.  Our dedicated team is eager to assist you with all your building upgrade needs today.

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