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
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302 | Value Judgment: Hotel asset pricing in COVID-19 age is different from previous recessions
Hotel appraisers and brokers expect distressed assets to come to market as the pandemic recession continues into 2021. Analysts say billions of dollars in private equity are waiting in the wings to acquire hotels underperforming as a result of the coronavirus crisis. But pricing will be different than in previous economic downturns. While a transaction may be distressed, it will not necessarily reflect distress pricing,” said Daniel Lesser of LW Hospitality Advisors. Long Live Lodging explores the state of hotel values as well as what may lie ahead with regard to transactions in 2021 as the spread of COVID-19 continues to stifle lodging performance. This report is part of our ongoing coverage of the coronavirus crisis and its impact on the hospitality industry.
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301 | The Road Warrior Ahead: Business travel will come back ‘with a vengeance,’ say experts
Global business travel is a $1.4 trillion industry. The Global Business Travel Association calculates the coronavirus pandemic in 2020 resulted in a loss of $113 billion in business travel spend in hotels, airlines and other sectors of the travel industry. But all is not lost. GBTA, industry analysts and travel management companies see some green shoots of hope for 2021 as the COVID-19 vaccine rolls out and corporations put some of their people on the road again. This report is part of Long Live Lodging’s ongoing coverage of the coronavirus crisis and its impact on the hospitality industry.