The Cap-Ex Dilemma
Wednesday, November 23, 2011

As owners and operators tried to maneuver their way through the last few years of economic woes, plans for significant capital expenditures to hotel properties moved to the back burner.  This was not done in secret andfor the most part, branded operators permitted many capital projects to be deferred.  We hear and read that the days of deferred capital expenditures and property improvement plans (or “PIPs”) may be coming to a close. This is particularly the case with what many refer to as “guest facing amenities,” the things that the hotel guest sees or experiences that might have a negative effect on the guest experience. Understandably, maintenance of brand standards are important to any branded hotel operating company.  On the other hand, many markets continue to experience performance at levels that may cover debt service, but do not leave much after that.  As we head into the fall conference season, owners and operators will likely need to assess their  desire for capital improvements to proceed  -- and their capacity to make them happen.

 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins