1. Use this time wisely: the current market conditions and reduced demand for hotel accommodation provides an ideal opportunity to carry out refurbishment works. This would otherwise have been disruptive and have a negative impact on operations. In an ideal scenario, the hotel would have to close to carry out the refurbishment in as short as possible time. Then the refurbished hotel can reopen as demand begins to increase. Keeping the hotel closed will prevent disruptions to the contractors on-site, allowing them to smoothly carry out works within a shorter programme. This would not only result in a shorter duration and smoother process but reduce costs as the associated preliminaries would be lower. 
  2. Set realistic objectives: With revenue levels currently low, funding for these projects becomes a careful balance. Thus establishing clear realistic objectives, set against a well-considered robust business case, from the outset is key. Consider the extent of works and ask yourself: what makes the most sense to improve RevPAR (Revenue per available room)? What level of refurb/works make sense for your hotel? Would it be a quick cosmetic work, which will have lower costs, shorter duration but a big impact on guest experience? You should also consider what the condition of the existing building is. If it's in poor condition or has a limited lifespan of elements requiring attention in the near future, meaning works are inevitable, now may be a good time. You might also decide to rebrand into serviced apartments due to public areas being negatively impacted.
  3. Phase the work: Covid-19 aside and in the case where the hotel simply cannot be closed, timing and phasing remain a key consideration. You can plan the work around peaks and troughs of the hotel’s demand. 
  4. De-risking schemes: Projections of the future are all over the place, from very optimistic to very pessimistic. Therefore, banks and investors are focusing on the risk in any proposal. The key will be to de-risk the development proposal as much as possible. 
  5. Expand target market/Be adaptable: Locations based on long haul travel are expected to be the longest to recover, ie. London and Paris. Secondary locations which get more local/national trade will recover quicker. Analysts also see hotel demand (occupancy and prices) will not return to 2019 levels, until 2023, assuming there is no major second wave. It could therefore be beneficial to look at making hotels more attractive to a wider audience, possibly repositioning or introducing attractions or new amenities.
Author
Alex Tempany

Alex Tempany
Project Manager