Recent research from online business finance firm Funding Options has reported that UK hotels have increased their spending on refurbishments by 57% in the past year.
Given guests now expect a higher level of sophistication and technology, it’s not too much of a surprise.
There’s also some suggestion the move is in response to home-lettings like Airbnb, but there’s currently no conclusive proof for this.
It does however raise the question of why, when and how you should refurbish your accommodation. Refurbishment or upgrade is a big undertaking and it’s important to know how it will affect your revenue short and long-term. Nothing would be worse than blowing your budget on an unnecessary or unsuccessful project.
Here are 8 considerations you need to take into account when refurbishing your hotel or B&B:
1. Does the Market Situation Require it?
In an area of high competition and innovation, it can be hard to keep up if your property looks the same and operates the same year after year. In the travel industry, something new is always coming along. For example, in the Middle East and Africa there were over 700 hotels and close to 200,000 rooms under contract near the beginning of 2016. This is forcing the region’s current properties to reinvent themselves to remain a viable location for guests.
2. Will It Make a Difference?
Obviously it’s impractical to upgrade or refurbish every time something new enters the market so you need to consider if your hotel or B&B is able to keep attracting your target market or not, based on the state of your property and the surrounding competition.
3. Refurbishment vs Upgrade
This is where the question of is your project a refurbishment or an upgrade enters the fray. According to Iconsult Hotels CEO Martin Kubler, refurbishment is for keeping your property in great shape inside and out, while an upgrade may be a response to what other properties are offering. For example, there may be nothing wrong with your showers so you don’t need a refurbishment, but if other hotels have rainfall showers you might need to upgrade to remain desirable for guests.
4. Typical Alterations
While each property should be treated on its merits, there are some typical repairs and upgrades that are made during a major renovation.
These could include:
- New furniture and equipment in guest rooms and communal areas
- General redecoration such as artwork, wallpaper, carpet etc
- Installing new bathrooms and plumbing
- Introducing new facilities like wifi, cable TV, or a gym
- Building new rooms from unused or newly created space
5. How Will It Affect Revenue and Occupancy
Any major alteration to your property is likely to have an impact on everyday operations and could affect the amount of revenue you’re able to bring in while renovations are being done. It’s important to think carefully about how to use your budget. Should you perform your refurbishment in stages so you keep interruption to a minimum or choose to close for a period of time for a fresh opening at completion? Either way, seasonal downtimes would be the best option so occupancy isn’t affected if you have to partially close the business.
6. What Are Your Guests Saying?
Deciding if you should refurbish or not might be a seesaw between yes and no but given the importance of online reviews and customer feedback, this is a good way of making up your mind. Your online reputation is vital to your booking strategy so any mention from guests about outdated facilities should be taken very seriously. The power of TripAdvisor should remove any hesitation or doubt.
7. Don’t Spend All Your Budget In One Place
It’s all very well to have a flash ‘new’ property but if nobody knows about it, what’s the point. Don’t spend all the budget on the renovations alone. Hold onto some to use for marketing and advertising so you can attract new business. If you’re struggling to make it stretch, consider using the last 10% on advertising and finish the rest of the build later.
8. Capitalize On It
After you’ve completed your refurbishment or upgrade, you need to reevaluate your whole business. It’s all very well to carry on the business as usual and revel in the heightened satisfaction of your guests but you also need to improve the overall performance of your property. New facilities means you can be more aggressive with your pricing to increase your revenue or appeal to a new market.
All in all, a refurbishment should always be done to benefit your hotel or B&B, not because you feel you have to. It’s a large project so if performance at your property is strong then hold off as long as possible. By the same token, if you’re getting clear indications you need it, don’t hesitate.