Stolen CapEx Money – Are You Next?

Assume that $200,000 to $300,000 of your hotel’s much needed capital expenditure program had been “stolen” and will not be recovered.  You will not be able to benefit from those CapEx projects, nonetheless; your hotel is still expected to exceed the guest expectations and surpass aggressive competition.  On the surface this scenario seems ridiculous, however; this is exactly what is happening to many hotels.  Too often CapEx projects waiting for their turn in the chronological order of replacements and renovations are delayed or cancelled.  Which of the following procedures are responsible for stealing funds from your future CapEx projects!

1)      Prematurely Replacing Guest Room Faucets

Your hotel waited far too long to get a guest bathroom renovation!  However; it is now complete, you are well ahead of your competitive set and your company expects to gain some impressive revenues over the next 6 years.  Not so quick!  18 months into this cycle you begin to see Q.A. comments regarding conditions of these faucets.  As you investigate, you determine that the chrome or plated finish is coming off and allowing the brass to show through on fixtures that should last 10 years!!! 

Cause

• Many hotel operators have found too late that abrasive cleaning pads or abrasive cleaning solutions “have found their home” onto maid carts.  Repetitive use of these products will slowly but surely scrape the finish off to expose the brass. 
• This unnecessary replacement is unfortunate since faucets will generally clean up beautifully with no more than warm water and a little mild soap.  Hoteliers should immediately remove these abrasive cleaners from the faucet cleaning process and re-train their associates!

 Projects Stolen from your Capital Expenditure Program

• On a 400 room hotel, having to pre-maturely replace the bathroom fixtures could steal $58,000 to $65,000  from that much needed meeting room sound system, roof project or new energy management system.

 2)      Prematurely Replacing Guest Room Bath Mirrors

In a recent walk-thru you found strange looking black spots about the size of dimes and quarters on many guest room bath mirrors.  They are unsightly and substantially lower the guests’ perception of the entire bathroom.  Because of the blemishes, franchised properties will face reduced Q.A. scores and independent hotels will face guest satisfaction issues.  This situation is a disgrace since bath room mirrors should last 7 to 10 years.

Cause 

• Black spots are caused by the silver plating separating from the glass and allowing oxidation to occur.  The silver plating of a mirror is protected on the back side by a special coating.  As hotel associates spray the mirrors for cleaning the liquid often runs down the mirror and collects at the bottom and sides.  This liquid then wicks into the back of the mirror.
• If ammonia is one of the ingredients of the cleaning solution, its contact with the protective coating causes the silver plating to oxidize and create black spots.
• The damage will not be obvious for several months or a year after the new mirrors are installed.  By this time it is too late to reverse the damage and replacement is almost always necessary. 

 ROI Stolen from your Capital Expenditure Program

• This 400 room hotel could face $64,000 to $78,000 to replace these mirrors!  What revenue producing capital expenditure project could you have put in place if this wasteful replacement had not occurred?

 3)      Premature Corridor Wall Covering Replacement

You begin to notice horizontal lines on your nearly new corridor wall covering.  These lines are not rips or gouges in the vinyl but instead unsightly “lines” that are becoming an eyesore. 

Cause

• This is a direct result of laundry carts being allowed on the guest floors.  Even though cushions, bumpers or suede leather wraps are installed on all four corners of the carts, damage can occur. 
• The protective bumpers (suede leather wraps included) are rubbing the wall covering.  Because of this, they are “burnishing” a line on the wall which changes the light reflective nature of that area of wall covering. 
• Associates often tie a towel or rope on the laundry cart to pull it as they collect the soiled linen.  Laundry carts will veer from one side of the corridor to the other…often rubbing against the wall for some distance.  Since the cart is not “gouging” the wall, the associate thinks nothing of it.
• The costly results of this will not show up at first, but when it does…..it is too late.  Short of installing a horizontal piece of woodwork over the damage, you will need to re-do your corridor wall covering project. 

 Money stolen from your CapEx program

• Unfortunately, this mistake will be responsible for deferring or cancelling $93,000 to $135,000 of your future capital expenditure projects.   

As you can see….it only takes a few issues to collectively steal $200,000 to $300,000 from your hotel’s CapEx program!

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