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You are here: Home / Annual & Multi-Year Plans / Discover The Fortune That Lies In A Multi-Year CapEx Plan

June 27, 2011 By John Fulton Leave a Comment

Discover The Fortune That Lies In A Multi-Year CapEx Plan

CapEx planning is something that theoretically comes up each year of a hotel’s life span. Some years the resulting CapEx from those capital expenditure plans are performed and some years they are purposely deferred. None the less, this yearly occurrence of the CapEx planning process tends to cause hoteliers to focus on a 12 month cycle versus a long-range (multi-year) management tool.  This is unfortunate, since long-range Capital Expenditure Plans offer so much more information in which to base strategic decisions. Additionally, long-range plans are multi-dimensional. This means you can visualize how projects can physically and financially overlap and synchronize over many years. This feature reduces chaos and encourages less disruption to the hotel’s business. Multi-year capital expenditure plans can range from 3 years to 10 years (with 5 year being the most common).  For improved success, follow these three valuable tips:

1. Planning ahead to avoid future waste – Multi-year plans not only address the hotel’s needs, they are also a process for management to schedule CapEx projects to coincide with times of low occupancy, plan ahead for architectural, interior design development and procurement processes. It also gives hoteliers an effective way to coordinate CapEx “project cash flow” with that of “financial cash flow”.

2. Make money by not wasting previous years’ CapEx dollars – Building multi-year CapEx plans are a strategic way to assure that capital money spent in a particular year is not voided by later CapEx projects. The money not wasted, supports additional projects that touch more areas of the hotel.

3. Valuable information source – If you anticipate any major capital dollars to be spent past a 5 year plan, extend the length of the “plan” to include that major capital year. As an example, replacing guest room casegoods falls two years past your current 5 year CapEx plan. Extending your plan to show the casegoods project allows management to better evaluate other guest room issues that may surface in the years preceding the casegoods. Remember, whether you have “clout” with the effects of your CapEx plans depends on how strategic you are with your decision making process.

Question: What are your experiences with “Multi-Year CapEx Plans”?     Click here to comment.

Filed Under: Annual & Multi-Year Plans, Organizational, Successful Projects Tagged With: capex, CapEx planning, capital expenditures, Extend The Life Of The Asset, John Fulton

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About Us

About Fulton Hotel Solutions

As the hotel industry now demonstrates a “comeback”, years of diluted and deferred capital expenditures do not have to … Read More...

Recent Posts

  • “Killer Tips” That Turn Your Hotel PIP Into A Winner
  • 3 Hotel PIP Secrets Exposed
  • 3 Common PIP Mistakes – Which Do You Want To Overcome?
  • 4 Deadly CapEx Budget Oversights – Are You Making Them?
  • Stolen CapEx Money – Are You Next?

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John Fulton
CapEx Strategist
(417) 848-2927

205 E. South St., Box 266
Mt. Vernon, MO 65712

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