Mr. Roberts

Architecture & Design

Renovate, Refresh and Generate ROI: Effective Strategies for Revitalizing Properties

By Alan Roberts, Vice President & Global Head of Embassy Suites, Hilton Worldwide

Renovations at hotel properties promise significant rewards. From higher guest loyalty scores to additional revenue streams and new business from trusted partners, revitalizing a property constitutes a win for both brands and owners - but only when done right.

As the Global Head of Embassy Suites by Hilton, I've witnessed many major renovation projects firsthand. The successful ones have three important factors in common: owners who think bigger than just their financials; careful planning with guests' needs kept top-of-mind; and a strong collaboration between the brand and ownership to prioritize renovation areas and create cost-effective strategies that align with individual budgets.

The Bottom Line Matters, But Value Engineering Isn't the Only Way

For most hotel owners, the primary factors when planning a property renovation are the price tag and the return for themselves and their investment partners. Hotel owners approach the property renovation process from one of two vantages. Either the owner acquires a property and thus knows from the start what renovations are required, and can have the necessary budget to begin the process immediately, or the owner already has the property in his/her portfolio. For the latter category, a different approach is needed.

First, owners need to understand the future of the brand and use the renovation as an opportunity to align to ensure they are reaping the full benefits of brand affiliation. Next, they should assess how the hotel measures in the brand's key performance indicators. A major renovation is the single best time to address high guest impact areas that may have been falling short and plaguing the property. Missing this opportunity could mean years before these issues can be properly solved. Finally, it's important to understand the position of the hotel in the economic cycle and effectively budget the project to take advantage of the desired timeline.

To ensure owners are capitalizing on the full power of our brand, we created the Embassy Suites Atrium Refresh, a renovation initiative that transforms the original hotel atriums from traditionally large, open-air spaces filled with live plants, large scale water features and multiple elevation changes, into scalable social lobbies that invite guests to work, dine and socialize in comfortable spaces. Our new atriums, a signature gathering place and feature of our brand, include a soothing color palette, comfortable and stylish furniture, dcor reflective of the hotel's location, work-friendly features like easy access to power and Wi-Fi, and a vibrant dedicated bar area for the brand's complimentary Evening Reception.

The Atrium Refresh does more than just enhance the aesthetics of the atrium - the program is a targeted strategy intended to maximize renovation budgets while delivering a guest experience relevant to today's travel preferences. We achieved this goal by better activating and commercializing the overall atrium through the creation of an inviting space that encourages guests to stick around long after the complimentary Evening Reception has ended. Coupled with the expanded onsite dining options available at many Embassy Suites properties, guests are enticed to purchase additional food & beverage.

Beyond brand priorities and guest feedback, external factors also affect the timing of refreshes. For example, if a new hotel with state-of-the-art facilities is under construction within an existing hotels market, it would be wise to start planning a renovation to remain competitive in the market. Planning for good and bad times, such as an economic downturn, is also important to determining the timeline for a refresh project, as this will impact your anticipated return on investment following a renovation.

Renovating Without Irritating: Minimizing Impacts on Guests

When planning a major renovation, our recommendation to owners is always one that minimizes the inconvenience to guests. With this in mind, there are two different approaches owners can take.

Owners can opt to renovate the property in phases by beginning with a space that has a minimal impact to guests but would generate additional revenue that can be reinvested into the property for further upgrades. A good example of this approach is starting with meeting space. The remaining phases of the project that have the most impact on guests, such as changes to the lobby or guest rooms, would be scheduled during a period when occupancy tends to run lower.

Alternatively, owners can decide to close the hotel entirely to carry out a major renovation. While this strategy requires a larger investment upfront, it often results in quicker returns on that investment. This is a bold step and should be well thought out and modeled before jumping to this solution. In markets of high seasonality, the increase in ADR that can be achieved with a freshly renovated hotel can payoff with big dividends.

A successful example of this approach is the renovation at the Embassy Suites by Hilton Orlando Lake Buena Vista Resort. This property was one of our first to undergo a full Atrium Refresh using a design inspired by our Atrium Refresh Guide. The property shut its doors completely during the off-peak season with the goal of opening in time for the more lucrative holiday period followed by the peak ADR season in the winter months. This decision not only allowed for a speedy completion of the project ‒ renovations were completed in approximately five months ‒ but also a swifter return on investment. Six months after the renovation, the ownership group reported they had ramped up to numbers that were forecasted in a 3-year pro forma in a scenario in which renovation work was completed without closing. Needless to say, they were thrilled with the results, as were we! This case speaks to the positive impact of a successful collaboration between ownership and the brand - everyone wins, including guests!

While the Embassy Suites by Hilton Orlando Lake Buena Vista Resort is a great example of why closing should at least be considered for a major renovation, we have seen great successes with both approaches. Since launching the Atrium Refresh program in 2013, results have shown that Embassy Suites hotels that have completed a renovation have, on average, seen a 12 percent increase in RevPar and 7 percent increase in occupancy following completion.

Partner Well

Successful brands understand they are working with owners' money and rely upon them to maintain and grow their brands. Winning partnerships hinge on negotiating and understanding each other's needs and articulating a mutual definition of success.

Brand leaders should work with owners to maximize the available budget for each individual project. Based on experience, brands can help owners identify aspects of a renovation that provide the most benefits and enhancements of the overall guest experience. Hotel leaders should also help owners prioritize specific upgrades or changes based on guest feedback or what is important to the overall strategy of the brand.

Often, owners who take the time to plan thoroughly and effectively in getting the renovation done, experience a quicker return on their investment post-renovation. We see this consistently across Hilton's veteran All Suites brands, Embassy Suites by Hilton and Homewood Suites by Hilton. Although the price points and service offerings differ between these brands, there are natural synergies and efficiencies when it comes to renovating that can be shared and applied across the category.

In each case, a strong partnership with owners has been the key to completing the project effectively while remaining true to signature brand pillars. Currently, 45 percent of Embassy Suites by Hilton hotels are undergoing a renovation aimed at modernization. Between new openings and the high percentage of hotels planning a complete Atrium Refresh by 2019, more than 75 percent of Embassy Suites by Hilton properties will have an interior that is less than six years old. This is part of a commitment to continue investing in our existing portfolio, and to maintain Embassy Suites' more than 30 year legacy as an All-Suites hotel innovator. To date, we've renovated 50 properties with another 62 currently in the works.

Get Ready for Positive Guest Feedback

Well planned renovations can have an immediate and real impact on the guest experience, which manifests in increased satisfaction scores, guest loyalty and the number of repeat customers.

2016 marks the first full year since the Embassy Suites by Hilton Atlanta Airport completed its stunning renovations, including a full Atrium Refresh. The property has realized vast improvements in its overall customer experience scores - moving up a whopping 94 positions in the ranker. Similarly, Embassy Suites by Hilton Orlando Lake Buena Vista Resort saw big gains in its customer loyalty scores, finishing 2015 in the top 30 percent and winning the brand's 2015 "Make It Right Improvement ‒ Renovated Hotel" award.

Benefits for the Brand

It's exciting to watch these early prototype hotels complete massive renovations, see immediate returns on owner investment through lifts to their ADR and grow their positive customer experience scores. What's more, in many cases, owners have experienced impressive gains sooner than expected, which as the "brand guy" is music to my ears. That tells me we're doing everything we can to drive successful partnerships, resulting in a thriving brand that delivers on the promises made to both our owners and guests.

While each completed renovation has its own unique success story, we know we have developed properties that both the brand and owners are proud to welcome guests to. These properties perform better than they did pre-renovation and are positioned to rapidly grow and increase their loyal customer base. Building that trust and partnership is already leading to new business ventures that will expand the brand and satisfy individual hotel owners for years to come.

Alan Roberts, Vice President & Global Head of Embassy Suites by Hilton, serves as chief strategist and champion for the brand. His focus is product and service standards, unit distribution strategies and ownership relations. He is also responsible for operational excellence, profitability and the further expansion of the brand's portfolio. A 30-year veteran of the industry, Mr. Roberts has served in many capacities. He started his career on the Brand Performance & Sales Support team for Hilton Garden Inn (HGI), as a Director. He also served as Sr. Director, became HGIs Vice President, Brand Performance and Sales Support. Mr. Roberts joined Embassy Suites by Hilton in 2013. He was named to his current role in 2016. Mr. Roberts can be contacted at 703-883-1000 or alan.roberts@hilton.com Extended Bio...

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