What is a hotel property improvement plan?
While some owners may not look kindly upon the immediate financial implications of a property improvement plan (PIP), each one presents an opportunity to reevaluate the hotel and plan for its future profitability.
That’s right: PIPs—when handled correctly—can be positive for hotel owners.
If hoteliers approach PIPs strategically, all parties benefit from the renovations. The property’s asset value increases and operating costs decrease because more efficient systems have been installed. It’s a win-win-win—for guests, owners, and brands.
In this post, we cover the basics. We’ll explain what a PIP is and provide some helpful tips for navigating your next hotel property improvement plan.
What is a PIP for hotels?
A PIP, or property improvement plan, is an action plan designed to bring a hotel property into compliance with the latest brand standards. PIPs are a fairly regular occurrence for hotel owners. They happen every six to 10 years.
More often than not, PIPs are created by brand managers or franchisors and recommend exterior and façade renovations, updates to hotel amenities and common spaces, new interior design elements, improvements for ADA compliance, and more. Property owners typically negotiate a timeline for the required changes.
The goal of a property improvement plan is twofold. First, PIPs help global brands maintain a consistent guest experience across properties. Second, these improvements help hotel owners increase the profitability of their properties. By making necessary repairs and modernizing their hotel, owners can better serve guests, gain market share, and generate more revenue.
Elements of a hotel PIP
PIPs vary for each brand and individual hotel properties. While older developments may require upgrades to mechanical and electrical systems, newer hotels may only need relatively minor cosmetic changes. In short, there is no one-size-fits-all property improvement plan.
Generally, hoteliers can expect to update design elements that are essential to brand standards. Light fixtures, faucets, and furniture are staples of brand identity. Guest rooms and amenities matter, too. PIPs may require improvements to the hotel lobby, business centers, corridors, elevators and stairways, fitness centers, meeting spaces, pools, and any restaurants or dining areas.
Some property improvement plans may also call for updates to the hotel exterior and outdoor spaces. Landscaping, improved exterior lighting, and parking lot updates can be included.
Today’s PIPs also account for energy efficiency and operating costs. After all, the goal of these plans is to help owners maximize their hotel’s profitability. Updates to mechanical systems, plumbing systems, electrical systems, and HVAC systems may all be covered in the scope of the PIP. All these practical updates can save hotel owners money in the long run.
Remember: PIP renovations are often negotiable. Talking to a team of architects and engineers with hospitality experience will help you quantify the cost of each requirement and identify opportunities for value engineering. Plus, getting quotes for the work will prepare you for success at the negotiating table.
Executing a property improvement plan?
Since 1992, Ramaker’s hospitality team has developed close relationships with major franchisors, keeping our architects and interior designers up to date with the latest brand standards and hotel design trends. View our hospitality brand experience and recent projects here.