The right upgrades can improve any hotel property, especially return on investment (ROI) projects. The management team may offer ideas or take on jobs requested by owners. However, it might be hard to realize a profit if even one key component is missed.
These are the critical areas hotel owners need to know about ROI projects. After evaluating the various aspects of a potential investment, management can calculate the guaranteed return and move forward with the undertaking.
They must meet brand standards
Brand-name hotel properties must always meet company standards when considering an ROI project. Pitching the idea after working through every detail will gain the confidence of those in charge.
Collaborate on different aspects of the project so the final product matches the brand’s vision for its properties. The brand is an essential partner in any ROI project, so align everyone’s interests to secure the final buy-in.
They might be vanity efforts
Hotel owners sometimes mistake vanity efforts for ROI projects. Even if the hotel owner is the only person investing in the property, a group of leaders should assess the plans.
Updating the property’s signage might improve a hotel’s curb appeal, but won’t likely pull in enough new guests to pay for itself. Other vanity proposals could include efforts such as:
- Renovating the floors
- Installing new sinks
- Repainting the walls
After thinking of new ROI projects, compare them to current trends to see if they’ll make money back or just improve the property.
They can save money annually
Big efforts shouldn’t be management’s sole focus. Smaller measures can also save money and create a significant return. The key is for these projects to make money well after they’re completed, so consider only high-quality materials and supplies.
Towels are a high-priority ROI venture. Low-grade fabrics become thin, rough or torn after multiple uses. A towel supply made with 100% cotton will ensure luxury guest experiences and last longer.
The small details make a big difference to guests. It could be what lands return clients and saves money on laundry.
They should include thorough bids
Get thorough bids for ROI projects. In addition to labor prices, a completed proposal includes timelines and expenses, along with warranties and taxes.
Management fees could become part of the project, as well. More significant undertakings require multiple leaders to ensure effortless communication and direction. The cost of that leadership shouldn’t come as a surprise after signing the contracts.
They could create different revenue
Hotels benefit from two kinds of revenue — direct and incremental. Direct ROI projects will cause an immediate spike in profits. Creating an app so guests can check-in virtually makes any property more appealing because it’s easy to use and promotes independence.
Marketing is an incremental project, and it takes time to calculate the total revenue from a campaign. Management will experience the same thing with ROI projects — sometimes, both at once.
An in-house restaurant automatically begins returning revenue after it opens. Guests and locals will all stop by to try out the new menu. It will also create long-term profits by appealing to people who want to stay at properties where they know they’ll eat great meals.
A project that results in multiple revenue forms may be worth more attention than one with singular financial gain.
Give each project time
Hotel management should plan every step to calculate the ROI of potential projects. With time, hoteliers can find upgrades that immediately improve quarterly profits. Consider everything from extensive renovations to convenient towel upgrades to make every dollar count. All the effort will pay off in the end.