In a wide-ranging discussion at HotelSpaces '23, four seasoned hotel design and construction leaders sat down to unpack the challenges and opportunities they’re facing today. They had quite a bit to discuss, digging into some of the most nettlesome questions plaguing the industry: what does it take to get renovations off the ground after years of delays and spiraling deferred maintenance costs? When is technology worth investing in, and when should it take the back seat? What are guests really looking for in 2023 and beyond?
The panel explored these issues and more, offering an illuminating snapshot of the industry today and a glimpse of where it’s headed. Moderated by Kavitha Iyer, Head of Design at IHG, the conversation included David Breeding, SVP of Design & Construction at Aimbridge Hospitality; Kevin Filer, SVP of Design & Construction at Davidson Hospitality; and Dan Hansen, Global Head of Brand for Hyatt Studios at Hyatt.
Designing PIPs that Drive Revenue—and Guest Satisfaction
After years of pandemic-related delays to performance improvement plans, owners and brands across the industry are sitting down to figure out how to get things moving again. As always, return on investment is top-of-mind. When Filer reviews a PIP, he looks carefully at areas where it might be possible to drive revenue in the short term, making it easier to spend on other concerns in the long term.
“If a PIP talks about a light refresh of a restaurant but wants a full renovation of the guest room and bathroom, we might say, ‘If we put a little bit more money and re-concept the restaurant, we could probably get the revenue up to 20-30 percent,” he explained. “And we've been finding that brands have been fairly open to those discussions, where I'd say, ‘Well, maybe the restrooms we could push back for 18 months or 24 months.”
Balancing more design-focused projects against basic infrastructure needs is always a challenge, but it helps to remember that guest satisfaction is usually worth the investment. Hansen recalled balking at an early-2000s directive from Marriott to upgrade from seven-inch mattresses to nine-inch ones. However, it was only a matter of time before he discovered that the upgrade made a noticeable difference to Marriott’s customers. “It was like, ‘Wow, okay, I guess the bed matters.’ I always remember that. I try to think, as we go forward: what are the things that guests will like that will drive revenue?”
Indeed, it can hurt to overlook the things that make a brand stand out. “In terms of brand standards, we've tried to look at it in terms of—what does the property in that particular market need?” Iyer stressed. “How do you stay relevant? How do you get ahead of staying relevant? Every day that you sit on a property that feels less so, there’s more new product coming into the market that will take away from your investment.”
To make the PIP process easier for everyone involved, Breeding advised operators to maintain open lines of communication with their brand partners. “Have that initial conversation early on, defining those expectations,” he said. “Nine times outta 10, the PIP comes in, you read it, you price it, and you realize, ‘Wait a minute, that's really not what we should be doing.’ So have that dialogue. Know where to push back, because you know your hotel better than the brand.”
How Important Are ECMs?
The panelists apply a similar philosophy to technology, asking what will impact guest satisfaction the most while delivering a meaningful ROI. “We try to start with a completely blank slate and say, ‘What does the guest want when they get there?’” Hansen said. Future-proofing is a crucial part of the equation: in a recent project at Hyatt, he sprung for fiber internet cables over cheaper copper options because of fiber’s longevity. “If I've gotta invest a little bit more upfront to ensure a solution that's future-proof, then it's something we should consider.”
Electric vehicle charging stations are increasingly important as well. “Most of our owners want us to put them in at all their hotels,” Breeding said, with Iyer speculating that at least 30% of customers drive a hybrid or fully electric vehicle. “It draws guests in,” she said. “Now you're paying for the hotel and get free charging.”
It’s not just EV charging that attracts customers, but an overall commitment to sustainability. “The one thing I learned after joining Hyatt was how important that is to guests,” Hansen said. “Some of these national contracts, if you don't have a green hotel, you just don't get them.” He stressed the importance of robust energy conservation measures (ECMs), even if it can be difficult to calculate their ROI. “More and more guests—and certainly national accounts—are choosing brands that have great ECMs.”
A Smart Approach to Sustainability
Sustainability is a long-term project, which means that investors can be reluctant to spend money on it for assets they only hold onto for five years or so. At Davidson Hospitality, Filer’s team finds a middle ground by looking for ECMs that offer a two-year payback. “We've partnered with a number of vendors, for every new asset that we bring on board, to do a lighting survey and a water survey,” he said, adding that they also look at trash and recycling opportunities. “We're helping the environment, but we're also helping the bottom line; it’s a win-win for everybody. We've been pretty aggressive. When we first take over a place, we budget it in; we know we're gonna spend some money upgrading systems.”
Breeding takes the same approach at Aimbridge, ensuring that manufacturers and design partners are also looped into sustainability efforts. “We push it very heavily back to the design firms, making sure that they’re buying sustainable products and they’ve got that envelope,” he said.
When it comes to convincing owners to make the investment, Breeding relies on brands to help make the case that they lose market share when they’re not in the green hotel category. “We're getting a lot of traction on that,” he concluded. “But it's a challenge.”