How to Maximize Hotel Profits During & After a Renovation

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If you’re renovating your home, you often move your living spaces away from the construction area or go stay with family for a short period of time. While inconvenient, it’s typically a very doable option to accomplish temporarily. Besides, after the disruption you’ll get to enjoy the wonderful new spaces in your house.

However, for hoteliers renovating their properties, this temporary fix isn’t quite so simple. Facility upgrades are necessary for maintaining a competitive property that appeals to discerning guests, but the disruption it brings can sour the guest experience quickly and an ill-planned renovation kills ROI. To ensure your renovation is as non-disruptive as possible – and it pulls in additional business when complete – you must put extensive thought into a variety of considerations.

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Partial or full closure?

If your hotel needs to maintain a short-term cash flow, a partial or staggered renovation is probably the best choice. If the focus is long-term revenue or reopening to reposition the hotel at a different star level, a full closure is likely the better bet.

Repositioning exercises

It’s essential to evaluate both the cost and the value of completed renovations in order to ensure positive ROI from a revenue management perspective. Do room renovations warrant a reclassification of room types? Will this change how you position your hotel to customers? Will your room rates change? Remember: Hotel repositioning should be a combination of sales, marketing and revenue management.

The right timing

Many hotel managers try to schedule renovations for the off-season because lower demand means more flexibility for construction and guest displacement. What is even more important, however, is to consider the timing when the construction will be complete. Because you’ll want to plan a grand reopening to take advantage of the momentum the updated facility creates, make sure the timing is prime to target guests. One example of poor timing: A new hotel opens down the street and therefore steals the spotlight from your recent renovation unveiling.

Impact on reviews

Online reviews are a critical part of how guests research a facility. A renovation will likely impact reviews both positively and negatively. No matter how hard you try to hide the construction process, guests are bound to complain. After construction is complete, however, guests will hopefully leave those shining sought after reviews. Either way, be prepared for overall ratings to fluctuate and be proactive about pricing strategies during these times.

Evaluating business 

Evaluating contracts and group bookings is an important renovation consideration. If prices are increasing, it may be time to cut ties with contracts that are no longer good business for your hotel. For group bookings — which can be made up to 18 months or more in advance — it’s important for revenue and sales teams to work closely throughout the renovation process. If the wrong rates are offered to groups, a hotel could end up losing money due to underpricing, or, worse yet, face empty rooms due to pricing uncertainty and an inability to effectively bid on groups.