Organizational Archives - Fulton Hotel Solutions LLC

January 13, 2014 By John Fulton Leave a Comment

“Killer Tips” That Turn Your Hotel PIP Into A Winner

Product Improvement Plans can be a tremendous asset to the life blood of any hotel. Even though a PIP is designed to position a hotel for the future, it is also a very serious capital expenditure process. A little work on the front end of the PIP project can be most rewarding to hotel ownership, management and the renovation team. Consider the following tips….to help your team complete a PIP which will postitively affect the guest perception of the hotel.

1. Review & reconcile the PIP document

Product Improvement Plan documents can have mistaken or mis-leading information. Leaving these inaccurate pieces of data in the PIP can cost you substantial money. One of the requirements might read something like….“85 rooms have new wall coverings. These wall coverings are acceptable however the remaining rooms must be re-vinyled to match.” As an example….if the acceptable room quantity was actually 185 units, it could lead to an approximate $80,000 glitch in the cost analysis of the PIP. Even a few misleading issues added together could throw the PIP estimate off by several hundred thousand dollars. Bring all erroneous issues to the attention of the franchise’s PIP department. Get all the inconsistencies resolved, the wording changed and a revised PIP issued.

2. Determine the cost of the PIP

Some organizations use a combination of their Chief Engineers, outside Contractors and an Operations Director to “wing” the estimating phase of a Product Improvement Plan. This leaves too many “gray areas” and overlaps that can cause budget embarrassments at the end of the project. Good examples are such project costs as waste management, freight variances, sales or use taxes, contractor overhead & profit percentages, purchasing fees, equipment rental, storage, etc. Hoteliers can expect a better PIP project if they use an independent consultant to estimate the wide variety of elements involved in executing and completing a Product Improvement Plan. Such services are not expensive. Information and documents produced by such consultants are beneficial to ownership, financial partners, hotel management and the project team throughout the renovation process.

3. Assemble the right team

The mission is to accomplish the PIP renovation with the least disruption to the hotel guest and operations staff. The sub-components of this mission are bringing together a general contractor, architect/interior designer, purchasing group and consultants that all “buy-in” on bringing the project in “at/or under budget and on time”. Unexpected issues will surface in every Product Improvement Plan project, but each team member must commit to resolving those issues without direct effect to the overall budget or schedule.

Need a little help understanding how John Fulton can turn your hotel PIP into a “Winner”?

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November 16, 2012 By John Fulton Leave a Comment

3 Common PIP Mistakes – Which Do You Want To Overcome?

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.

January 30, 2012 By John Fulton Leave a Comment

CapEx Planning – If Not Now, When?

It has been noted in many recent trade journals that 2012 & 2013 will see elevated activity in renovations, compliance to brand standards and the repositioning of hotels!

This expectation comes with a solid foundation!

• All indications point to another year of very little debt or equity financing available for new construction. This is a huge advantage for existing hotels that revitalize their properties for the coming business demand. As business improves, no-action regarding deferred CapEx is “poor business”. It is important that hoteliers take action to both “Extend The Life Of The Asset” and position the hotel to outperform the competitive set.

• Even those properties seeking to secure “contract” business will need to invest in their asset! Prospective clients and meeting planners often demand a commitment that specific items be addressed before an agreement is finalized. Requests such as these may involve meeting room technology, guest room upgrades or fitness center improvements. Identifying and completing those improvements before your client visits your property is strategic! For hotels…..you never get a better time to make a “good first impression”……than the first impression!!

Therefore, properties that refuse to strategically plan and activate upgrades and improvements will miss the full impact of a recovering business environment. In reverse, those hoteliers that have prudently performed……or are now “kicking-off” CapEx projects will be the first in line to capture the new business.

So the real question is: Your CapEx Planning – If Not Now, When?

Take a moment to share your insight……click here.

Need a little help understanding how John Fulton can formulate solutions to “Extending The Life Of Your Asset” and better organizing your hotel’s “5 Year CapEx Plan”?

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November 21, 2011 By John Fulton 26 Comments

The Power Of A “Black Box” – Are You Using It?

Attention to detail is always a must for hospitality R & M and CapEx!

Although I have shared this story many times verbally, this is the first time I have committed it to paper. I attribute the story to two highly respected hospitality friends of mine; Bob Brock (nationally known hotelier who purchased the 5th franchise of Holiday Inns in the 1950’s) and one of his most valued General Managers, Willard Brittin. Although both have passed-on, I heard both men tell the story deep from their heart…..to point out to hotel staff and management “the importance of attention to detail”.

The “Black Box” of their object lesson is imaginary, yet effective!

• The owner of this Black Box is to carry it to a remote location within the hotel or on the hotel property, leave it behind and return to their office using a different route (through both guest and non-guest areas)….all the while looking at the many details that are noticeable (floors, finishes, lights, fabrics, mechanical, hardware, exteriors, landscaping, paving, etc.). When faulty issues are discovered they are to be noted and converted into “work orders”. Some concerns may be simple Repair & Maintenance projects while other discoveries will require future CapEx as a solution.

• In one week the owner of the Box is to return to the location using a different route. Again, the importance is giving full attention to the items and issues that are exposed on this additional new path to the imaginary Black Box. Upon reaching the Black Box it is moved to its new home in another remote location. Its owner returns to their office using a totally different route, all the while “recording for action” any newly observed concerns.

• Each week this task is to be repeated and “work orders” issued to correct various matters.

This Black Box exercise will do much to place a hotel far beyond its competition in resolving those small details that the staff so often overlooks and guests see! Try it!

To share the techniques that you have used to improve “attention to detail”……click here

October 27, 2011 By John Fulton Leave a Comment

Breathe New Life Into Your Hotel – Let CapEx Do The Job

The statistics quoted in current trade journals are clear in identifying that patrons are finally looking for lodging and hospitality services again!

Having a fresh look and breathing new life into your hotel is now very critical in the process of seizing that new business! Maybe your hotel cannot accomplish a multi-million dollar CapEx renovation; however, based on this “new” business….astute hotel operators will see the need to meet the guests with noticeable improvements.

Some hoteliers will only be able to accomplish a few projects while others will have funds set aside to accomplish more. Those properties that operate under a franchise will no doubt be directed by the franchise system to carry out specific improvements based on brand standards. However, there will be additional issues that will affect the guests’ perception of your hotel. What will the guest see when they arrive? Is the access onto the property clean and groomed properly? Can the experience entering the hotel and approaching the registration desk be improved? And the guest rooms…..are they competitive and fresh in appearance?

This is where “Capital Expenditure Planning” comes into play by addressing issues proactively that affect the hotel guest. If you have formulated a 5 Year CapEx Plan most of the above issues should have already been identified, solutions formulated and cost estimates compiled. At this point, the issues are….when to activate the projects and gaining access to the capital funding. For those operators that do not have long-range CapEx plans in place, all is not lost. It will be necessary to do a walk-thru of at least the issues outlined above. Establish a list of those items most likely to negatively affect the guests’ perception of your facility. Discuss solutions then obtain estimates/quotes for suitable resolutions to these troublesome issues. At that point, set in place a plan to systematically resolve each issue based on the funds available and least disruption to business.

Share your experiences in solving capital expenditure planning by “clicking here”.

August 2, 2011 By John Fulton 2 Comments

Five key points in successful CapEx projects – are you using them?

Positive results regarding Capital Expenditure issues or their accompanying renovations……do not “just happen” successfully.

It goes to say, much work goes into converting Capital Expenditure Plans into actual working documents. Such tasks as gathering information from the hotel, imputing data into a CapEx format, identifying costs, wading through the approval process; are all required to roll out an “approved” Cap Ex Plan. If any of those Capital Expenditures call for a “project”, then there is much more work ahead. Although a brief article such as this cannot list every detail, it can identify some of the major issues that contribute to a successful CapEx project.

1. Leadership – Very early on, most hoteliers will identify a “project manager” to be the point-person and central authority to execute the CapEx work. As expected, a very large percentage of the project success will depend on this person’s ability to work with integrity as a team builder, motivator, and communicator; as well as dedicated to the success of the budget and schedule.

2. Partnership – An early-on collaboration between the project manager, management company and hotel’s senior staff will fine tune job site scheduling and proactively address various administrative Issues. Depending on the organizations’ structure, it is also advisable to keep the “hotel ownership” informed of the general progress.

3. Additional Specialists – Depending on the “scope of work”, other project team members that may be involved are architects, mechanical engineers, interior designers, renovation contractor, purchasing group, logistics company, specialty installers, etc. Strategic partnerships should be cultured between the project manager and each outside consultant.

4. Scope of Work Documents – These formal papers will need to be thorough, accurately defined and prepared in an easy to read format; since they are important directions to each member of the “project team” and cannot be taken lightly. Scope of work documents in collaboration with any project documents (see item #5 below) will define the specifics of what is to be removed, replaced, modified, refinished, etc.

5. Project Documents – Factors that also heavily contribute to successful CapEx projects are the development of accurately detailed drawings, thorough specifications and confirmed quantities.

Pass on your techniques for successful Capital Expenditure Projects (click here).

July 12, 2011 By John Fulton Leave a Comment

3 Secrets Of Mastering Your “Emergency CapEx” – Are You Using Them?

Although the cost of “Emergency Capital” cannot be accurately anticipated – one fact is certain…..Emergency CapEx can be expected! Additionally…..it always happens after the annual CapEx package is “approved and final”!

The dilemma is then……where does the money come from to reconcile these unplanned Emergency Capital Expenditures?

It is advised that hoteliers establish a separate category in their CapEx programs for “Emergency Capital”. This process singles out such expenditures so management has the ability to historically track emergency spends. The following three processes will assist hoteliers in setting up procedures taking Emergency CapEx to a new level of responsibility and organization.

1. Initial Emergency Budgeting – It will be necessary to establish an Emergency CapEx amount for the hotel (or portfolio). If this is a new process, the first year may require a total “guesstimate” without any supporting history. If historical data is available, it should be used to identify a benchmark budget. Younger properties and limited service hotels will generally incur smaller emergency spends; where older, larger full service hotels can naturally expect more capital intense issues to arise.

2. Procedural Strength – Although almost all “major” emergency spends will fall into CapEx, it is very important that the estimated budget not be published within the annual CapEx package. If the dollar amount is circulated among the associates, projects seem to discretely emerge…..that uncontrollably absorb the Emergency monies. It should also be pointed out that most emergency issues will need to be addressed instantly. Because of this, these situations cause the normal Capital Expenditure approval process to be “bent” to meet the urgency. None the less, what is important is that everyone knows the reconciliation details of each emergency spend will have to be addressed immediately with upper management. Policies and procedures must be established and communicated ahead of time to successfully accomplish this.

3. Validation Of Requests – As a warning; non-emergency projects will tend to wander into emergency spends! For an effective Emergency CapEx process to work, all items or projects must truly be “emergency” in nature (ie: Convention Center HVAC failure affecting the attendees comfort and potential revenue disruption, phone system failures, storm damage, etc.). An organization should never be tempted to book project “over-runs” or routine capital to the Emergency category. Doing such defeats the accuracy of historical tracking. Additionally, management will want to single out these emergency expenditures to better understand why they occurred. Such evaluations may identify inferior routine maintenance techniques. Willingness to correct these issues will increase the effectiveness of future Emergency CapEx. Additionally, accurate tracking of Emergency CapEx can be most helpful in anticipating “Emergency” budgets for future planning.

If organizations take the above processes seriously, they will discover that there are important paybacks in establishing a solid Emergency CapEx program.

Future Savings – During the upper management review various improvements may surface. For this reason, it is important to identify what caused the emergency, what could have prevented it and what can be implemented to avoid similar issues in the future. This review process can contribute to substantial future savings, especially if there are multiple properties in the portfolio.

Reduction Of Unnecessary Emergency Spending – It can be expected that there will be attempts to replace major items under the cloak of Emergency CapEx….when they can still be repaired. Often not enough analysis has gone into the rush to spend emergency capital. This results in less expensive resolutions having been missed. Worse yet, a specific department may desire to avoid incurring a “repair expense” at the hotel level. Directing the expenditure into Emergency CapEx to avoid a “hit” in departmental expenses. Hoteliers can expect Emergency CapEx to trend downward once all associates understand that they are accountable to a set of guidelines.

Review Of Maintenance Records – This gives upper management a formal process to identify why items end up in Emergency CapEx. Most are a process of normal wear and tear, but failures to offer proper maintenance may surface. This identifies staff that may need additional training or services. Also it may be found that some maintenance should be “outsourced”….to better meet the more complex nature of today’s hotel systems.

Question: What techniques have you used to master “Emergency CapEx”? Click here.