During economic recessions, it is no surprise that hoteliers are forced to reduce spending. Even though this process generally affects all areas and departments of a hotel, it is always unfortunate when CapEx is one of the sectors affected with deep cuts.
Once economic recoveries begin to emerge, most hoteliers will soon start thinking about dusting off their CapEx plans. However, waiting to update existing CapEx plans until after a recovery has started is not recommended. Instead, updating and re-aligning strategies previous to an economic recovery is crucial. Using this proactive approach, the planning is properly thought-out and completely assembled for action before it is needed. Therefore, hoteliers can be prepared to quickly implement CapEx when economic conditions warrant such. This will allow quick action to differentiate between their product and the competition. To even further maximize the results, avoid making the following costly mistakes.
- Not evaluating your competitive market – Research what guest features that your competition has used to capture business. Determine what innovative approach your hotel will need to exploit a competitive edge for a new surge of business. Some things you discover may be out of reach, but others creatively adapted to your hotel can take guest satisfaction to a new level.
- Failure to investigate the current condition of your facility – Not only should you re-evaluate such items as mechanical, plumbing, parking lot, etc.; it is important that public areas be appraised for conditions that may have occurred during recessionary times. This would involve commercial and guest FF & E, food & beverage outlets, kitchen and meeting space equipment. The object is to address items that will affect guest expectations.
- Multi-year CapEx plan not updated – Or, not existent. If your hotel does not have a multi-year CapEx plan, then there is value in building one. If a multi-year plan is in place, then enter the new found strategies into this long-range document. Of course, some CapEx items or projects will not be appropriate for immediate implementation, but should still be recorded into a future year.
It is important that you spend precious CapEx dollars effectively to address the “new normal” that surfaces after times of recession. Only by re-evaluating your present condition can a hotelier be assured that they are strategic in their future CapEx “spending”.
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