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.
Ginny Morrison of Evanston, Illinois, is a 33-year veteran of Spire Hospitality, a hotel management company with a portfolio that spans coast-to-coast. As vice president of sales and marketing, Morrison saw the coronavirus pandemic decimate the meetings business. More than a year later, she’s witnessing a comeback as small-meeting planners are actively booking events for the last half of 2021 and beyond. As public health agencies expand COVID-19 vaccination programs across the U.S. and states ease up on public-gathering restrictions designed to keep the virus at bay, the hotel industry is seeing small meetings begin a comeback. In Episode 317, Long Live Lodging covers the state of the small-meetings sector and how hotels can grab their share of the meetings business during and post-pandemic. This report is part of our ongoing coverage about the coronavirus pandemic and its impact on the hospitality industry.
The Hunter Hotel Investment Conference will be the industry’s first large event to be held during the coronavirus pandemic. The Atlanta event will be a hybrid format of in-person and virtual access, also an industry first. Lee Hunter, chairman of the conference, knows the level of expectation is high among other conference planners as well as industry professionals eager to network after more than a yearlong hiatus. Episode 316 of Lodging Leaders podcast features Hunter as he tells what it takes to re-launch the industry’s conference circuit amid the COVID-19 outbreak.