Boutique Hotels vs. Chain Hotels: Managing Renovation Costs

Renovations are a certainty for any hotel, ut they don’t always happen as seamlessly or as often as they should and that’s often due to the number of variables.

hotel renovation costs

Even with the knowledge, expertise, and labor force to execute a renovation, some hotel owners are still reluctant to undergo remodeling. The most common reason owners delay (or simply don’t go through with) a hotel renovation project is because they’re not sure how much they’ll end up costing.

To help make the planning process a bit easier, we’ve provided a quick guide to help you understand renovation costs; whether you’re building a boutique hotel or a major franchise property.

When Should I Consider Renovating?

First things first, you need to determine if it is time to renovate. If your hotel is currently experiencing any of the following, you need to start planning your renovation:

  1. Decline in profits: you’re booking less room nights in comparison to months/years past

  2. Competitors are upgrading their hotels 

  3. Negative reviews via sources like TripAdvisor (specific (negative) comments on property condition – not service)

  4. Your property has failed branded mandated inspections (which may require completion of a PIP)

  5. Your brand is implemented new design features

How to Calculate Hotel Renovation Costs

Determining your overall budget can be challenging; as hotel renovation costs are always relative to the size of the hotel, scope of the projects, materials being used, labor etc. So, after you determine your overall budget you can determine a rough, average renovation cost per room by simply dividing the budget number by the number of rooms in your hotel.

For example, they tell you there’s a renovation cycle that begins around a five-star hotel’s third to sixth year, averages $8,000 to $12,000 per room, and works its way up until -- after about 50 years -- it costs approximately $100,000 a room.

Budget and Bid

Improper management and oversight of your renovation can result in additional expenses. So, it’s important that you take the time to receive and review multiple bids from reputable contractor on construction and materials costs.

It is equally as important that you hire contractors and suppliers who specialize in the hospitality sector. “Hospitality contractors” understand the nature of the business; turning around rooms efficiently and quickly because the longer a room is out of service, the more money it is costing you.

Keep in mind, when reviewing bid proposals, the lowest bid is not always the best deal. As part of your selection process, leveling the proposals is a significant step to confirm each contractor is quoting the same scope. Some contractors can perceive the scope differently than others even though the document identifies the work.

An Experienced Hospitality Team Will Be Worth The Money

No matter the size or scale of your hotel renovation project, one way to control renovation costs and ensure your project is completed within your defined budget and on time is to hire a team of hospitality professionals. From your designers to procurement specialist, contractors to installers, having a team with extensive hotel experience will pay for itself in the long run.

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