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pip

Six Warning Signs Your Hotel Is Overdue for a Renovation

Cicero's Development Corporation | December 2, 2019

PLAINFIELD, IL, DECEMBER 2, 2019 -- Perhaps you've been there before: After checking into a hotel, you head to your room and open the door only to find yourself in a decor best described as Early American Garage Sale. Carpets are dirty and frayed. Wallpaper looks dingy. The bathroom has mold. You vow never to return. It can happen to the best hotel. Hotels that enjoy higher occupancy experience greater use of their guestrooms, translating into more wear and tear. The environment also plays a role. For instance, resorts near the beach will be adversely impacted by sand, saltwater, and the sea air that can destroy carpeting, rust metal fu...

The Current Impact of Brand PIP Requirements on Hotel Sales

Eric Guerrero | November 22, 2019

By Eric Guerrero The most consistent issue HVS Brokerage & Advisory has encountered during transactions is whether a group is budgeting sufficient capital for prospective asset acquisitions that require PIP renovations. An incorrect estimate means buyer groups must increase their capitalizations or request a price reduction on a dollar-for-dollar basis relative to their cost increases. This ultimately changes many metrics late in acquisition processes and lowers IRRs because any extra capital is drawn entirely from equity and not a blend of equity and debt. Recent observations are detailed below. The lesson is that accurate PIP estimat...

The Dark Side of Hotel Brand PIPs

Thomas Magnuson | August 25, 2016

By Thomas Magnuson, Co-Founder & CEO Magnuson Hotels It is claimed that PIPs (property improvement plans) exist to ensure all franchisees are brand compliant and to drive customer satisfaction. However, it appears big brands such as Choice, Holiday Inn, Wyndham and BEST WESTERN, often use them to push hoteliers out of a market to benefit corporate expansion strategies. So are PIPs really in the best interests of franchisees? Refreshing a Brand Brand refreshes, defined by Property Improvement Plans (PIPs), are initiatives that many major chains have undertaken in recent years and by default, are an essential part of branded hotel own...

Underwriting Your PIP by William G. Sipple

William G. Sipple | December 4, 2013

Ask any hotelier about their experiences with financing and you'll likely get a mixed-bag of answers, but most will point out that hotels remain one of the hardest asset classes to capitalize. To complicate matters, a number of the branding companies have recently announced either renewed efforts to bring lagging properties up to current standards, or new standards programs intended to differentiate their brands from the pack. As a result, many hotel owners today face major capital expenditures or risk losing their brand affiliation, which potentially triggers a default under their existing financing. Typically, there are a couple of co...

Property Improvement Plan (PIP) & Capital Expenditure Decisions for Canadian Hoteliers

Graham Coe, of HVS | August 6, 2013

By Graham Coe This article discusses recent trends in the Canadian lodging industry and their impact on capital expenditure and property improvement plan (PIP) requirements. Elements of an effective PIP and different PIP scenarios are also examined. Property Improvement Plan (PIP) & Capital Expenditure Decisions for Canadian Hoteliers The physical condition of a hotel property is one of the most important determinants of operating performance and, ultimately, market value. When faced with capital expenditure, property improvement plan (PIP), or re-branding decisions, hotel owners must make the right decisions in order to maximize op...

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