Understanding PIPs and the franchised property to hit your targets
According to a recent Expedia study, 72% of travelers prefer selecting a hotel based on its guest review score rather than one with a brand name or a lower price. This underscores the necessity for franchised hotels to distinguish themselves as establishments that prioritize guest satisfaction. Property improvement plans (PIPs) are essential for ensuring properties align with guest needs and brand standards. These comprehensive strategies facilitate the enhancement of hotels to meet customers’ evolving needs and desires. Unlike independent hotels, franchised hotels are responsible for upholding brand consistency across multiple locations, spanning regions and sometimes continents. This prompts the crucial question: What factors should franchised hoteliers consider when contemplating the adoption of a PIP?
Understanding the rationale behind PIPs within franchised hotels is essential. Subsequently, it’s vital to assess current revenue drivers, survey neighboring hotels, and strategize on repurposing materials and reallocating budgets to align with the plan’s requirements.
UNDERSTANDING PIPs WITHIN FRANCHISED HOTELS
The initial step is understanding that not all franchised hotels share the same circumstances. As owners begin the PIP process, navigating which brand requirements are negotiable and which aren’t can prove challenging. Typically, these plans are negotiated before architecture or design teams come into play. It’s crucial for owners to enter negotiations with a clear understanding of which updates will have the greatest impact on their property’s revenue and enhance guest satisfaction.
To stretch financial obligations, owners may consider requesting phased PIP updates. To help, it’s important to prioritize funding for upgrading high return on investment (ROI) spaces initially. Owners can then balance future construction spending by focusing on essential spaces for maintaining brand identity and market presence, even if they offer a smaller ROI.
For owners on tight budgets, consulting early with architectural and design teams can be beneficial. This allows for brainstorming of creative cost-saving solutions related to brand issues before finalizing a PIP agreement. In some cases, architects and designers can also serve as mediators between stakeholders, strategically implementing PIP components to align with everyone’s objectives.
CONSIDER CURRENT REVENUE DRIVERS
Before implementing changes, it’s necessary to grasp the revenue drivers specific to franchised properties. This may entail looking beyond the confines of the PIP and implementing alterations that enhance the hotel’s long-term viability or marketability for owners considering selling their assets.
By proactively upgrading key amenities in advance of the PIP cycle, the hotel can anticipate and address future needs. An example of this scenario could involve owners considering casegood replacements for properties where the current casegoods are still considered relatively new in the PIP cycle but will become outdated in three to four years. Investing in new casegoods can reduce the near-term investments for new ownership and enhance the asset’s marketability.
SURVEYING SURROUNDING HOTELS
Just like with any business, it’s critical to survey competition within the area. What’s attracting customers to choose one hotel over another? If the guest rooms are in great shape, consider the lobby design and public spaces. See what is holding people back from coming to the property. It could be as simple as all the hotels in the area have already converted all their bathtubs into walk-in showers, and that demand is driving customers to go to that hotel over one with a bathtub. When looking at a PIP, it’s essential to consider local competition and understand what drives customers to other hotels.
REPURPOSING MATERIALS AND REALLOCATING BUDGETS
PIPs are an imperative tool to bring franchised hotels up to industry standards. For example, reflecting on the hospitality landscape of a decade ago, it was common to find large armoires housing analog TVs. This evolved into flat screen TVs placed on credenzas, and now wall-mounted TVs have become the norm. To attract new and repeat guests, technology advancements surpass traditional renovation requirements. If the technology within a hotel fails to meet contemporary standards, addressing this takes precedence over standard renovations. To execute these updates within budget constraints, designers and architects must employ creativity, repurposing existing furniture, sometimes foregoing costly treatments, and reallocating funds toward enhancing technology.
Understanding the underlying motivations behind PIPs, evaluating existing revenue streams, conducting thorough assessments of nearby competitors, and devising innovative approaches to repurpose materials and reallocate budgets are critical for franchised hoteliers initiating a PIP. When implemented effectively, franchised hotels can reap significant returns on investment from their completed property improvement plans.
As a licensed architect specializing in hospitality with NELSON Worldwide, has extensive experience working with most major hospitality brands and boutiques. An extremely passionate and detailed professional, she leads project teams using an open and collaborative approach with scopes ranging from renovations and PIPs to reflagging and new ground-up builds.
Katie Pass-Brinker works with the NELSON Worldwide hospitality team to create and produce high quality design through all phases of project development, ensuring the client’s expectations and design vision is exceeded, and achieve the firm’s goal of design excellence.
Karen Pelzer brings a unique expertise to the NELSON Worldwide team, having worked for both a hotel owner and various design firms throughout her career. She understands the delicate balance between design and operations in the world of hospitality, recognizing that these two domains are unique yet interconnected, and when not in sync, can create economic, environmental, and social consequences.
