The pandemic has triggered a demand for better hotel designs and amenities, with guests increasingly choosing sustainable and COVID-friendly properties. As a result, the need for renovation and redesign of hotels is evident. However, the pandemic-induced recession has caused many hotel owners to defer maintenance and renovation projects, causing their properties to become unattractive to guests. Depleted reserves coupled with the pressure to renovate could force some of these owners to sell their hotel assets. Read on to learn why you should renovate your hotel sooner rather than later.
Causes of Delays in Renovations
Most hotels depleted their cash reserves during the pandemic while striving to stay afloat. Although the situation has somewhat improved over the past few months, it will take more time before hotels can return to their pre-pandemic financial states. This is mainly because these businesses are channeling most of their income towards the repayment of debts. In general, a lack of finances has made it difficult for hotel owners to renovate their premises, let alone service their loans. In fact, expert projections indicate that distressed and stressed hotel assets will soon crowd the market. Creative developers are also increasingly hunting for distressed hotels, intending to convert them into affordable homes, which is a more lucrative property market segment.
The Benefits of Renovating Your Hotel
By renovating your property now, you would enjoy benefits such as:
Easier access to skilled labor – The U.S. construction industry continues to suffer a severe labor shortage. According to the National Association of Home Builders (NAHB), this industry requires 2.2 million new hires over the next three years to keep up with the demand. With many construction and renovation projects currently on hold, the competition for skilled labor is likely low. Hence, it will probably be easier for you to get skilled workers if you choose to renovate soon.
Cheaper renovation loans – Due to the pandemic-induced recession, most lenders adopted less stringent policies, making it easier for businesses to access loans. The federal government also provided some relief in the form of low-interest loans. However, lenders fatigue is compelling more lenders to tighten their measures again, and hence, business owners may find it hard to access loans soon. If you borrow now, you have a higher chance of getting a cheaper renovation loan.
Easier access to construction materials – The pending renovation projects will likely commence once hotel owners get the necessary funds. Unfortunately, the backlog in this industry will lead to an increase in demand and a rise in the cost of these materials. Therefore, by renovating early, you will likely have less competition and hence, have access to cheaper construction materials.
Reopen before competitors – Renovating now while everyone else is waiting will give you a chance to reopen earlier than your competitors. This way, you will also get to build an audience of loyal customers amid less competition.