How to Handle the Hotel Renovation Costs
Renovation costs for hotels have been steadily building over the years. This can be difficult to deal with, especially if you run a franchised property that requires these renovations. But what’s causing these price increases and what can you do to deal with it? Today in the Southeast International Hotel Brokers blog, we’ll delve deeper into this topic.
Renovation Costs are On the Rise
It seems like everything about renovation costs is rising. Not only do the construction and materials cost more, labor costs are rising as well. Constantly adjusting the budget to accommodate these price increases is frustrating, but it may help to get a better idea of why exactly this is happening.
Why is it Happening?
Here are a few reasons hotel renovation costs continue to rise:
Less Supply, More Demand
This may sound like Economics 101, but fundamentals are fundamentals for a reason. The simple fact is that there’s an influx in hotels needing renovations or wanting to make expansions, and the labor to go around doesn’t quite meet this demand. Thus, prices for labor and prices for construction materials go up too.
More Brand PIPs
With franchised hotels constantly switching things up to keep up with the latest trends, this means more PIPs. When you have a franchised property, you have to keep up with the PIPs to stay in accordance with corporate policies. This means you need to work PIPs into the budget one way or the other, and you need to make sure to have them done in a timely manner.
What Can You Do About It?
But what can you do to deal with these changes? Well, unfortunately, there’s not really a simple answer. Sometimes, cuts have to be made to make room in the budget. To find a workable solution, you’ll need to pore over your budget and find where and when you can make room for necessary renovations. The good news is, in theory, these renovations are designed to make your hotel more appealing to guests, meaning you’ll ultimately have more revenue.
Sell Your Hotel with Southeast International Hotel Brokers
If you’re looking to buy or sell your hotel, choose our expert team of hospitality brokers. Southeast International Hotel Brokers has the experience, knowledge, and resources that you need. Our team will walk you through the entire buying and selling process, making it as easy as possible. Contact us today to see how we can help you.