The renovation cycle

The surge in occupancies in major metros such as NYC necessitates a shortening of the traditional five to six year renovation cycle. Added to that is the compulsion to keep up with the Joneses on technology and beds. The Atlanta Journal Constitution has an article on how hotels in Atlanta, GA are seeing a marked escalation in renovation costs brought on largely by items such as plasma TVs and high thread count beds. Material costs notwithstanding, the loss in revenue while the rooms are being spruced up can add up to a really big ticket particularly in the Big Apple, a ticket that is unlikely to be met by the conventional three per cent reserve for replacement many hotel companies set aside for FF&E.

For most hotels, though there is little choice as the article notes that the home remodeling trend is contributing to the makeovers quoting Joe Hindsley of the Hyatt Regency in Atlanta “There is an expectation now that the hotel must meet the qualities of the residential home”. Structural changes include making scaling the front desk back to half its size, while the lobby is redesigned to create “conversation group seating”. Clearly there is no going to back to the era of large desks with slots for keys and mail.

The renovation cycle does have an environmentally sound consequence as a by-product. Many hotels sell their cast-offs to other operators, nursing homes, consumers and even interior decorators purchase hotel surplus to furnish homes they hope to sell as this article in Consumer Affairs points out. The result as the article points is out is a “bonanza for bargain hunters”.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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