|
|
|
October 23, 2000 - Seeking to broaden the base of information available
on the subject of hotel capital expenditures (CapEx), the International
Society of Hospitality Consultants (ISHC), has published CapEx 2000, a
successor study to the original CapEx publication released by the Society
in 1995.
In what the ISHC hopes will become a regular five-year look at the issue of CapEx, they again surveyed the industry at large to see whether spending patterns related to CapEx have changed over time, from the total (dollar) amount spent to the specific areas of a hotel where expenditures are spent. Similar to the 1995 study, this study was performed from two perspectives: 1) Through a retrospective analysis of what a representative sample of hotels actually spent on CapEx over time to remain competitive; and 2) Through a prospective analysis of the cost to replace the various components of a hotel based upon their typical useful lives. In order to obtain relevant data for CapEx 2000, the authors, Kathe
Nylen, Suzanne Mellen, and Rick Pastorino, all ISHC members, polled hotel
owners and operators for CapEx data related to the 1988 to 1998 time period.
This resulted in useable survey data from approximately 350 hotels. In
order to fund the cost of the research, the ISHC sought sponsorship money
from the industry at large. They asked for $5,000 per sponsor � no more,
no less � to avoid the possible perception that any one entity may have
influenced the results. In the end, they collected a total of $50,000 from
the following sponsors:
The ISHC gratefully acknowledges the sponsors of ISHC and commends them on their willingness to participate in CapEx 2000. CapEx 2000 expands upon the original 1995 research and thus includes additional property types and breakouts. Specifically, an all-suite category was added to the full and limited-service hotel categories, with all categories showing CapEx spending patterns by location, average daily rate, property size and age of property. The study also investigates CapEx spending among public and private hotel owners, as well as repairs and maintenance expenditures. The publication also provides a comparison of the CapEx 2000 data with the data from the initial CapEx study, published in 1995. That study (referred to as CapEx 1995) encompassed a time period from 1983 to 1993. As a result, the sample includes over 20 years of actual data specific to CapEx for hotels. Generally, what the historical (retrospective) data collectively reveals is that, regardless of product type, CapEx spending for a hotel generally increases as a hotel ages, as illustrated in the following chart. What the survey doesn�t specifically tell us is whether these averages are the right amount for a given hotel. A few other highlights of CapEx 2000 findings are provided below:
Together, the historical and prospective sections of the study quantify the amount of CapEx required to adequately maintain a hotel over its life cycle. Note: The ISHC does not advocate a position on the amount of funds to be reserved or the amount of CapEx required by a hotel at any point in time. Both CapEx 2000 and its predecessor, address solely the actual amount of money spent (retrospectively) by a group of hotel owners to renovate and refurbish their property and/or replace FF&E in their hotel properties, as well as an estimated amount of CapEx likely to be spent (prospectively) to remain competitive into the future. International Society of Hospitality Consultants (ISHC) ---- is a professional
organization of hospitality consultants who dedicate themselves to providing
the highest quality of professional service. The ISHC was founded in recognition
of the public need for competent, unbiased advice, and professional guidance
on the many issues affect and influence the hospitality industry.
|
CapEx 2000 authors: Rick Pastorino
|
Also See | Mike Leven Recipient of the 1999 ISHC Pioneer Award for Trend-Setting Work in Hotel Franchising / Jan 2000 |