Tips for increasing CapEx and maximizing design ROI
Tips for increasing CapEx and maximizing design ROI
28 FEBRUARY 2018 8:44 AM

Here’s a look at the three crucial areas of capital investment, as well as factors to consider when making a hotel design budget. 

As a hotel industry, we continue to face record-high capital expenditures with spending on an upward trend since 2011.

More and more, hotel companies are undertaking updates or enhancements to deliver on brand-standard requirements, which increase costs. Further, guests today provide instant and continuous social media feedback and online reviews on properties’ amenities, design and quality—mostly driven by their desire for experiential and local travel experiences. This has raised the bar for hotel owners and operators to deliver on guest expectations and has raised day-to-day operating costs and ongoing CapEx.

There is no golden rule to setting CapEx budgets and schedules. However, various influences beyond just the age of a property—such as brand, hotel size and room type and mix—continue to be significant factors. When determining the program and design of new hotels, it’s similarly critical to consider upfront construction and furniture, fixtures and equipment costs along with the long-term property improvement plan to determine an accurate and reasonable percentage to hold for future property updates.

Critical areas of capital investment
Public spaces
Today’s guests spend more time in lobbies than ever before, making these common spaces a central source for energy, entertainment and social activities.

As a result, we are removing or converting formal meeting rooms and reinterpreting them into open and collaborative public areas where guests can work, play and be social. We also are seeing an increase of the introduction of food-and-beverage concepts into these spaces where guests can eat and drink, while also appealing to the local community.

Guestrooms continue to shrink in size as travelers spend less time in their rooms and more time in public and social areas.

Within these smaller footprints, we are investing more in the details. Examples include multiuse furniture like nightstands and sitting-area chairs that now double as technology charging stations; bedframes with built-in lighting; and open closet structures. Updated bedding and the addition of local art and decor play a role in further enhancing the space.

Bathrooms are increasingly important to guestroom design today. As a result, a surge in replacing tubs or showers with walk-in showers and the addition of other bathroom amenities like plush towels and beauty items offer guests the ultimate luxury.

Technology is a considerable and growing area of investment for hotel properties. Modern-day guests are reliant on their connectivity to the outside world, so it’s no surprise that Wi-Fi bandwidth and web access is a heightened priority for hotels.

We’re also seeing investments in improvements to audio/visual equipment and systems to support public connectivity and entertainment. Electronic keycard systems are another emerging trend, as they provide guests with an easy and seamless check-in experience. Lastly, we’re seeing an increase in the number of smart TVs, iPads and tablets incorporated as part of the design for guestrooms, lobbies, fitness areas and other common spaces.

Keep these factors in mind
There are several factors to consider when planning and budgeting for hotel design.

First, consider construction costs and material costs, both of which continue to increase year over year. Second, keep in mind PIP schedules and timing of improvements. While many brands have six- and 12-year PIPs with a focus on soft finishes at the six-year mark and hard finishes and case goods at 12 years, each PIP is unique and reflects the brand strategy as well as essential financial and accounting considerations. Lastly, don’t forget the hotel’s location (resort, airport, urban, suburban as some examples), full-service versus select-service properties, and average daily rate all influence the planning and budget process for property design improvements.

Combining industry influences with innovative design
With CapEx on the rise, it’s important to consider all of the factors that shape what both short- and long-term design looks like for today’s properties. As architects and designers, we’d love to only consider how a space looks and feels. However, since we’re faced with the reality of expensive construction and material costs along with increasing brand standards and customer expectations, budget will always be a significant component of any successful property.

Today’s best designers and hoteliers marry the best of both worlds, cost and design, to remain profitable and offer an exceptional guest experience.

Harry Wheeler AIA, NCARB, LEED is a principal at Group One Partners, Inc., an award-winning hospitality design firm based in Boston that specializes in architectural, interior design, and purchasing services for hospitality properties. Wheeler is a registered architect in 10 states and a member of numerous architectural, lodging, and marketing associations. For more information visit or email Wheeler at

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