Hotel Maintenance: Four Key Areas That will Increase Property Value

By Fred B. Roedel, III Partner & Managing Member, Roedel Companies, LLC | April 24, 2011

To maximize the return potential of a hotel investment requires a number of factors to come together. They include building a good building in a good market, developing positive free cash flow via strategic operations and last but not least, maintaining the asset.

The current and long-term value of a hotel asset is ultimately a function of its ability to reliably and consistently produce positive free cash flow. As we all know free cash flow is simply a function of revenues and expenses. If a hotel is not well maintained it will not be able to be a market leader in rate and its operating expenses will ultimately increase.

A proactive maintenance program doesn't have to be all encompassing all the time, but is a key element when it comes to maintaining the value of a hotel asset. The four maintenance areas we consistently focus on are:

1. Exterior Envelope

If you are a boater then you know there is nothing worse than a boat that leaks. It takes all the fun out of the experience. The same is absolutely true for any building, including hotels. The damage and issues that can result from moisture are well documented and the costs to correct and fix moisture damage can be daunting. About three years ago we were hired to work on a hotel that had moisture issues in the exterior walls. After a significant amount of time and energy was spent investigating the issue, it was agreed that it could only be corrected by opening up all the exterior wall areas, replacing approximately 50% of the steel studs and installing both a new exterior wall and a new interior wall. Had the hotel been well maintained such actions would have been unnecessary.

When we inspect hotels' envelopes we investigate the following areas:

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.