CAPEX

230 | Funding CapEx: New report tells what it takes for hotels to stay competitive

CAPEX

More than 20 years ago, a team of hotel industry consultants and asset managers got together to figure out how much hotels in the U.S. spend each year on property improvements and maintenance.

The idea was if owners and operators know in advance what it will cost to keep a hotel property up to date and in good working order, it would help them put the right amount of cash in reserve to deal with the expected ,as well as the unexpected.

In 1997, David Berins and Peggy Berg produced the industry’s first CapEx study. They recommended hotels increase their capital reserves from 3 percent, to 4 percent, to afford pending property improvement plans and inevitable equipment replacements.

Today, that 4 percent is still regarded as an industry standard. But modern day consultants say the reserve benchmark is woefully underestimated and CapEx planning is so much more complex than it was two decades ago.

So how are hotel owners and managers supposed to plan? And by how much?

In this episode, Lodging Leaders explores the latest CapEx report researched and published by two organizations – the International Society of Hospitality Consultants and the Hospitality Asset Managers Association – with the help of STR.

We feature David Berins of Berins & Co., who says he coined the CapEx abbreviation. We hear from Alan Benjamin of procurement firm Benjamin West, who has co-chaired the past several CapEx studies. And we talk to Matthew Hick of Access Point Financial, a specialty hotel finance company that lends for FF&E projects.

Resources and Links

To buy a copy of “ISHC CapEx 2018: A Study of Capital Expenditures in the Hotel Industry” visit ISHC.com.

CAPEX
  • 329 | Ruff and Ready: ADA gives hotels a short leash when accommodating guests with service animals

    Many hotels these days have made room for guests with disabilities. Hotel managers and staff should also know what the Americans with Disabilities Act says about accommodating guests with pets. During the pandemic lockdowns, a lot of people added a pet to their household and now they’re bringing Fido along on vacation. Hotel employees need to know how to cater to both consumers who are pet owners as well as guests who travel with a trained service animal. Episode 329 of Lodging Leaders podcast reports on how the ADA defines a service animal and how a hotel is legally obligated to serve a guest who comes with a dog or any other animal.

  • 328 | Curb Appeal: Hotels’ refreshed images designed to attract road trippers

    Nearly 48 million Americans plan to travel over the Fourth of July weekend, predicts AAA. Most of them will drive and many of them plan to stay in hotels. What makes a travel consumer choose your hotel? Price can be a factor but so can the story the property tells through its online photos and its real-life curb appeal. First impressions of a hotel set the tone for the guest’s entire stay. Its roadside image is more important than ever as the lodging industry this summer hangs its hopes on a comeback driven by domestic travelers. Lodging Leaders podcast explores the importance of a hotel’s curb appeal as hoteliers think of ways to attract travelers seeking safety and assurance as the nation emerges from the coronavirus pandemic.

Back to Top