Don’t let hotel PIP’s waste your valuable dollars
Product Improvement Plans issued by hotel franchise systems are prompted by a property reaching the term of its license agreement, a change of ownership or the anticipation of a change of ownership. Ordering a PIP evaluation suggests that there may be a business strategy at play that involves repositioning a hotel into a different service segment, aligning with a different franchise or refreshing it’s appearance….or all three. Whatever the reasoning, there are three mistakes that ownership should avoid:
1. Not getting prepared for the PIP.
When PIP Auditors see worn or dirty conditions, it causes them to look deeper for deferred maintenance and other infractions that maybe PIP related. By failing to let the hotel show at its best…owners do themselves a great injustice. To make this mistake means more issues will show up on the official PIP document. To be properly prepared, a heavy emphasis should be placed on issues such as a fresh coat of paint on fire lanes, doors/frames and scuffed walls. Overgrown landscaping trimmed or removed, winter kill shrubbery should be replaced, carpets/furniture/light fixtures cleaned and repaired while storage rooms should be cleaned out and re-organized and guest rooms in top condition. The last point in getting prepared for the evaluation is just as valuable as the above items……be present for the PIP “walk-thru”. Not only will you will gain valuable insight from the PIP Auditor, you will be more effective when it comes time for a later face-to-face meeting with the “brand”.
2. Not taking time to eliminate all errors in the PIP document.
Scour the document for comments that are not representational of your hotel. On a recent PIP, I discovered a requirement of replacing the mismatched guest room bath floor tile. Upon further investigation there was not an incidence of mismatched floor tile….anywhere. “PIP Auditors” often see several properties a week; often two in a single day. The reality is that they or the support staff may inadvertently cross-over notations from another property. If the above mentioned PIP were priced out without questioning that issue, it would have amounted to $500 to $750 per room; falsely impacting the PIP project by approximately $120,000. Especially “scrub-down” the guest room obligations, since any one faulty requirement in this area can heavily impact the PIP cost.
3. Failing to evaluate each PIP requirement against guest satisfaction, price/value and revenue generation.
All PIP documents contain requirements that will have varying levels of influence on guest perception and hotel revenue…..and each has a price tag. There may be requirements that relate to signature issues specific to the “brand”. Because of their importance to the franchise, these almost always are not worth the time to negotiate. However, other issues maybe based on general feelings of what that franchise believes will “take care of the guest” in their special way. In addition, other issues may be addressed due to “condition” (or degree of worn-ness). Now is the time to apply “creative problem solving skills” to look at every angle of the last two categories. Can items on the PIP be reconditioned successfully at a lower cost to gain several more years of use versus replacing now with an expensive new product? Can certain PIP requirements be re-scheduled into year 2 or 3, to allow revenue producing projects to be accomplished early in the PIP renovation?
General comments
- This is important….approach the “brand” involvement as a valuable associate that brings specific strengths to your future success. Therefore, after you complete above items 1 – 3, schedule a face-to-face meeting with the franchise representative. Based on your hotel’s guests…..discuss the effect of PIP items that add strength to the hotel and those that are counter-productive….due to their nature or un-recoverable cost. Work to produce common ground for a win-win business venture before you implement the PIP renovation. I once had a hotel General Manager tell me that his company could not make him run a bad hotel. In this statement I took it to mean that he had to do what it took to make the hotel experience appropriate for his guest. Don’t’ let a PIP miss the mark of satisfying the guest.
- There will be items that are not covered on a PIP. Therefore, take the opportunity to “touch” other needy areas, support systems and equipment not mentioned in the PIP. Evaluate these items based on bolstering guest satisfaction or enhancing revenue versus the dollar spent.
I’ve shown you 3 reasons to get on top of your PIP process. But, I have intentionally left out many others because I would like to hear your thoughts on the matter as well. Leave your remarks in the comment box below.
If you need help pricing out your PIP, watch this short video.
Since hotels daily encounter a multitude of issues that involve Operating Expense (OpEx) and Capital Expenditures (CapEx), it should not be a surprise that these two categories are occasionally an area of misunderstanding. Even so, most items found in a hotel can clearly be applied to one of the two above categories. However, for those times of confusion, the following tips may assist you in successfully resolving this issue.