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You are here: Home / Archives for CapEx scheduling

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.

Filed Under: Budgets & Reserves, Lifecycles, Organizational, Successful Projects Tagged With: capex, CapEx scheduling, capital expenditures, Extending The Life Of The Asset, hotel ownership, interior designers, John Fulton, management company, PIP, Product Improvement Plans, project documents, R & M

September 19, 2011 By John Fulton Leave a Comment

Welcome Your Guests Back With Something Better!

When October occurs, the “ordering phase” for a hotel’s capital expenditure program can be considered complete.  Waiting until this late date for items to be designed, specified, purchased, fabricated and shipped; pushes an end-of-the-year calendar date.

Not all is lost! Since most hotel business traditionally slumps from December to February, it still would be appropriate to use that time slot to perform and complete CapEx projects that prepare for the 2012 business.

So your strategy can be….welcome the guests back with something better!

With this being said, you should not initiate work on projects for December thru February until you have a developed a master plan! In that plan, use strategies that formulate a 2012 CapEx Plan aimed at improving guest satisfaction and promoting guest loyalty. To give a little help, the process is as follows:

  • Assessment Of Current CapEx Projects – Review your 2010 capital expenditures to identify any projects that should be expanded into 2012.
  • Evaluation Of Systems – Identify any new situations that surfaced in 2011 that will need to be addressed in 2012. Certainly it is natural to more focus on adding “glitz” to the facility, but failing mechanical systems, outdated technology, etc. adversely affect guest satisfaction and may need to take a serious position in the upcoming CapEx Plan.
  • Revenue Enhancement and Competitive Issues – You will not have a shortage of these projects. In fact, you will labor over eliminating projects that you know are viable, yet other needs seem to have a higher priority.
  • Pricing – Obtain preliminary bids and pricing.
  • Finalize Your Plan – This is the time to ask the hard questions, look at the costs, run ROI’s, balance the financial expectations and discuss timelines.

Within the above process, you should identify a few capital expenditures that can be kicked-off and completed before the 2012 business picks up. These should carry impact and be very recognizable to the guest!

With a well thought-out CapEx strategy…..you and your team can…….

 Welcome Your Guests Back With Something Better!

 Share your strategies on this timely guest issue – click here.

Filed Under: Annual & Multi-Year Plans Tagged With: capex, CapEx planning, CapEx scheduling, capital expenditures, hospitality, interior designers, John Fulton, management company, project manager, renovation

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).

Filed Under: Organizational, Successful Projects Tagged With: architects, capex, CapEx planning, CapEx scheduling, capital expenditures, hospitality, hotel ownership, interior designers, John Fulton, management company, project documents, project manager, project team, renovation

June 22, 2011 By John Fulton 2 Comments

3 CapEx “Schedule” Mistakes–Which Ones Do You Want To Get Rid Of?

CapEx dollars do not come easy.  If you are involved at the hotel level you realize each year that the property could have used more CapEx to meet the ongoing needs.  Those in upper management constantly balance financial issues and also realize that there is not enough CapEx money to go around.  For these reasons, processes should certainly be based on building Capital Expenditure Plans that avoid any form of waste.  This directly relates to the dollars that are applied to CapEx projects, successfully setting schedules that do not excessively displace business and holding to well organized internal processes.

The following 3 items negatively influence capital expenditure programs and aggressively diminish effectiveness. [Read more…]

Filed Under: Annual & Multi-Year Plans, Organizational Tagged With: capex, CapEx planning, CapEx scheduling, capital expenditures, hospitality

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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
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