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Hospitality Conversations:
Property Improvement Plans or PIPS


by Dr. John Hogan, March 10, 2010

Property Improvement Plans or PIPS, are a reality to today’s hotel owners and management groups.  If a property is part of a franchised system, dealing with PIPS can be an expensive proposition both at the time of sale as well as in continuing operations. The purpose of PIPs is to keep properties in compliance with all existing and new brand standards, as franchisors strive to maintain brand standards to protect their brands as well as the investments of all the other franchisees. 

The cost of PIPs could be staggering if they seem to all come crashing down at once, especially if a property is not meeting all of its current standards at a time when there is a potential change in ownership.  Almost all franchisors have a Property Improvement Plan system, because their goal is to maintain the quality of each of their franchisees. 

"If you want to predict the future, create it"
- Dr.Peter Drucker

In this second in a series of “HOW TO" columns titled HOSPITALITY CONVERSATIONS, I chose a topic that is of universal interest to all hotel owners: HOW TO SELECT THE RIGHT DESIGN FIRM TO REFRESH OR RENOVATE YOUR HOTEL .

I again reached out to qualified professionals in a nationally known company. Maryland based Jonathan Nehmer + Associates, Inc. is a multi-disciplined group with completed projects in the United States, Canada ,Mexico, India, China, Panama, Puerto Rico, Aruba , Bahamas, Bermuda  and Brazil www.nehmer.com

I asked the following two questions:

1. What are the factors that hotel owners and management companies must consider to protect their investment and project the ROI of the upgrade or update project?

  • As an Architecture, Project Management, and Interior Design firm specializing in the Hospitality Industry, determining the appropriate distribution of capital expenditures is something we are involved in from the beginning of every project.  The key to smart spending is to evaluate all of the issues affecting the physical aspects of the hotel to make sure that the available dollars are used in the correct manner, especially in these tough economic times.  The first step is to do a comprehensive Due Diligence inspection and review of the hotel, prior to putting pen to paper.  We know from experience that the more planning you do, the better the end result will be.
  • First impressions only come once.  As hotels struggle to keep occupancy, guests will remember their first visit, including things like good service and updated public spaces.
  • Investment in technology (if you are behind) is important if you are going to keep up with the competition.
  • Explore the benefits of sustainability and green products, in terms of energy savings to reduce operating expenses, increase the cleanliness and freshness of the hotel, cater to the ever-growing population of green-conscious travelers, as all this will ultimately lead to an increase in property value.  Keep the place attractive and local businesses will be proud to send their business contacts to you.  Construction projects that you embark on may become an extension of creating guest satisfaction and brand loyalty.
  • Look for items or areas to renovate that directly translate into ROI.  Updating the porte-cochere may increase curb appeal, but the smartest decision may be to defer the project until the economy improves.
  • Remember that the cost of each item in guestroom is multiplied by the number of rooms.  That is not to say don’t do it, just be responsible in what you buy and what it costs.
2. What are the most critical factors in successfully deciding which design firm to select?

Through our Project Management experience, we have found that the best means of selecting a design team is through Qualification-Based Selection.  This process means evaluating and choosing the best candidates by reviewing their experience with similar projects, checking their referrals, and calling their past clients before asking for a fee proposal.

  • Find qualified firms to interview by talking with other hotel executives and chains.
  • Create a list of interview candidates and narrow the field by issuing an extensive Request for Qualifications.  The more information you ask for, the better the responses you will receive.
  • Include a visit to the candidates’ offices to learn more about their operations and get to know who will work on your project.  Meet the actual people who will be doing the work.
  • Once you have a short list, review the scope of work with all candidates.  Make the first cut based on qualifications, then, with your best choices, ask for a fee proposal to help you make the final decision.
  • Make sure the candidates are licensed in the jurisdiction of your project.  You would be surprised how many times we find that they are not!
  • Make sure they have the right experience, i.e., hire a firm that does renovations if your project is a renovation.  Make sure the firm knows how to keep to a budget.  There are a lot of good designers out there, but there aren’t a lot of good designers who are also good businessmen.  You want someone who cares for your budget just as much as their fees.
Contributions to this article are from Jonathan C. Nehmer, AIA, ISHC, President, and Scott P. Rosenberg, AIA, LEED AP, Vice President, from Jonathan Nehmer + Associates, Inc., a leading Architecture and Project Management firm in the hospitality industry with offices in Washington, D.C. and San Diego, CA.  Mr. Nehmer is also a Principal with HVScompass, a leading hospitality Interior Design firm with offices in Washington, D.C. and Boston, MA.  Both firms’ project experience ranges from select service through luxury hotels, resorts, and conference centers. 

Jonathan C. Nehmer, AIA, ISHC  is a licensed Architect with expertise in all facets of architecture and interior design, design management, project management, and construction administration. His experience includes work as an owner's representative in the direction and management of commercial, institutional, residential, and hospitality projects.

Scott P. Rosenberg, AIA, LEED AP is a licensed Architect with more than twenty years of experience in architecture and real estate development-related fields.  His design experience includes hotels, restaurants, retail centers, office buildings, industrial, recreational, institutional projects, and tenant improvements. 
 


Jonathan C. Nehmer

Scott P. Rosenberg

KEYS TO SUCCESS is the umbrella title for my new 2010 programs, hospitality services and columns. This year’s writings will focus on a wide variety of topics for hotel owners, managers and professionals including both my "HOW TO" articles, and a number of  HOSPITALITY CONVERSATIONS.

Feel free to share an idea for a column at johnjhogan@yahoo.com anytime or contact me regarding consulting, customized workshops, speaking engagements ………….

And remember – we all need a regular dose of common sense.

Autographed copies of LESSONS FROM THE FIELD – a COMMON SENSE APPROACH TO EFFECTIVE HOTEL SALES are available from THE ROOMS CHRONICLE www.roomschronicle.com, www.smartbizzonline.com  and other industry sources. 

All rights reserved by John Hogan and this column may be included in an upcoming book on hotel management.   The opinions expressed in this article are those of the author and do not necessarily reflect the views of this publication

John Hogan is a successful hospitality executive, educator, author and consultant and is a frequent keynote speaker and seminar leader at many hospitality industry events. http://www.linkedin.com/in/drjohnhoganchache

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Contact: 

Dr. John Hogan, CHA MHS CHE
johnjhogan@yahoo.com
 


 
Also See: Hospitality Conversations: Selling Your Hotel In a Sluggish Economy / Dr. John Hogan / February 2010
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