Hotel Renovations Can't Wait Forever. So What Happens Next?

A growing number of hotels are reaching the point where long-delayed renovations can’t wait much longer. Owners have to make the numbers work, brands have standards to protect, lenders have their own requirements, and the hotels still have to compete.

So what will it take to work through the growing renovation backlog?

Scott Hammons has spent nearly 30 years across hotel ownership, operations and development. Today, as President of Ground LVL, he works with owners on value-add renovations, repositionings and brand conversions, bringing an owner’s perspective to decisions around capital, scope and execution.

We sat down with Scott ahead of HotelSpaces to talk about why the backlog is reaching a tipping point, what makes it difficult to work through, and where the opportunities are.

You’ve said there’s a huge backlog of hotels that have pushed renovations well beyond their normal cycles. Why is that becoming such a big issue now?

Scott Hammons: It’s become a big issue mostly because everybody has procrastinated and pushed the limit on how far these renovations can be pushed back.

I think we’re seeing a historic level of backlog. Based on my research, there are probably close to 1,000 full-service hotels in the lower 48 that haven’t had a renovation in more than 10 years, and about half of those may be beyond 12 years.

Since COVID, everybody has been waiting for the circumstances to get better or perfect, and we’ve waited a couple of years longer than I think anyone expected. Now we’re getting to the point where a lot of these assets can’t wait much longer, whether that’s because they can’t compete with newer supply, the brands can’t continue providing forgiveness, or owners simply don’t have the money and lenders are going to force something to happen.

If everyone agrees these hotels need work, what makes getting that work done so difficult?

Scott Hammons: The big fear is that if this huge critical mass of projects hits at once, a lot of the resources needed to renovate hotels have actually downsized since COVID.

In architecture, for example, licensed architects are retiring faster than they’re being replaced, and that experience goes with them. There are fewer architects and designers. Some manufacturers that used to produce goods for these renovations have gone out of business. So there’s potential scarcity in skilled labor, experienced design consultants and manufacturing capacity.

Then you add things like fuel prices, freight costs, tariffs and uncertainty. Everybody has been waiting for the circumstances to be perfect. They may never be perfect.

What needs to happen differently to actually start working through the backlog?

Scott Hammons: Compromise and teamwork. The brands, owners, lenders, investors and operators all have their own agendas and their own motivators, but no one party is going to get everything they want.

I see hotels where, if the brand doesn’t compromise, they could lose the hotel and it becomes something else. There are owners being asked to do work they simply don’t have the capital for. If they’re going to renovate, there’s going to need to be some compromise around what the scope should be.

At the same time, in many cases they need to renovate in order to compete against newer product.

What do you think people will get out of hearing all of these different perspectives together?

Scott Hammons: I think what’s interesting is that it’s rare to get everybody in the room and hear all of these perspectives together.

If I’m an owner, I may know the brand’s perspective and I may know the lender’s perspective, but I don’t often get to hear them talk about it on the same stage. If I’m a supplier, I may not understand all of the complexity that’s driving my business.

And I think it’ll be interesting for the brand folks to be in a room full of people who are trying to juggle all these competing priorities but genuinely want to make their hotels successful.

At HotelSpaces, Scott will lead Finding the Lemonade in a Historic Hotel Renovation Backlog with leaders from Marriott, Hilton, HEI Hotels & Resorts, Peachtree Group and Benjamin West.

They’ll tackle the backlog from every side: what needs to get done, how it gets funded, where brands and owners can compromise, and what it will take to actually move the work forward.

HotelSpaces brings together senior leaders responsible for hotel design, construction, engineering and capital projects October 25–27 at the Omni Fort Lauderdale.

There’s still time to request your invite and join us in Fort Lauderdale.