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business meeting negotiation

How hotel owners can reduce the cost of PIP agreements.

As hotel franchisors look to improve their overall brand image and quality, previously neglected properties are being issued property improvement plans (PIPs).  Because the upgrades laid out in a PIP are mandatory, failure to comply by the dates specified will result in serious penalties and even property closure.  Unfortunately, PIPs are often expensive, and many hotel owners receive them with reluctance.  However, before signing off on a PIP, franchisees can take certain steps to keep their renovation and update costs down.  Here are some of the suggestions that you should try to negotiate your PIP to make it more affordable.

1) Review

First, you should review your PIP with a general contractor and the PIP brand representative to ensure you understand what the agreement specifically asks of you.

2) Identify Negotiable Terms

As you go through your PIP, look for negotiable items such as details on flooring materials and wall finishes as these elements can vary widely in price.  Speak to your contractor about the price range of alternative items and offer cheaper alternatives to the franchisor for approval.

3) Remove Long-Term Maintenance

All long-term maintenance items should be removed from the PIP.  While items such as replacing water heaters and roof replacements will have to be addressed, there’s no need to have these tasks done by the dates specified in the PIP.

4) Develop a Construction Plan

While your franchisor may offer you the option to complete PIP work in stages, you should not accept this deal as it usually results in higher costs overall.  Instead, develop a plan where you complete work one floor at a time.  This will leave other floors open for guest use and will ensure that revenue continues to come in.

5) Discuss Possibility of Interruptions

During the renovation process, it’s normal to encounter time-consuming interruptions.  Before you start work on implementing a PIP, speak to your franchisor to determine how setbacks will affect deadline requirements and penalties.  Make sure you and your franchisor are on the same page regarding this issue to ensure that penalty costs do not blindside you.

6) Make Sure Your PIP is Fair

If you feel that the requirements laid out in your PIP are unfair, then do some digging.  Find out if there is another property under the franchise that recently received a PIP but was not subject to the same requirements.  This information could give you leverage when you negotiate.

These are some of the steps that you should take to negotiate and keep the cost of your PIP as low as possible.  Are you looking for a general contractor to advise and help you with your PIP?  If so, then contact Nikki Fox at Parkwest General Contractors at Nikki@ParkwestGC.com .  Our experts at ready to assist you with all your building renovation and construction needs today.


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