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January 13, 2014 By John Fulton Leave a Comment

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

PRODUCT IMPROVEMENT PLANProduct 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”?

There is no charge to talk.  Contact John Fulton for details.

Filed Under: Budgets & Reserves, Organizational, Successful Projects Tagged With: capex, CapEx planning, capital expenditures, emergency capital planning, hospitality, hotel ownership, interior designers, John Fulton, management company, PIP, Product Improvement Plans, project documents, project manager, renovation

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

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

Filed Under: Organizational Tagged With: black box, capex, capital expenditures, hospitality, hotel ownership, interior designers, management company, operating expense, R & M, Repair & Maintenance, work orders

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

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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?
  • CapEx Planning – If Not Now, When?
  • The Power Of A “Black Box” – Are You Using It?

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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Fulton Hotel Solutions LLC

John Fulton
CapEx Strategist
(417) 848-2927

3952 E. Bentree Place
Springfield, MO 65809

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