Hotel owners lament brand-mandated upgrades

May 10, 2012 04:00PM

After weathering the recession, U.S. hotel owners now must contend with upgrading their buildings at the request of hotel brands, the Wall Street Journal reported. Cash-strapped owners say they’re now expected to pay up for costly cyclical renovations and hotel upkeep, known as property improvement plans, that hotel owners were temporarily exempted from during the downturn. The Journal could not estimate the number of overdue hotel property investment plans.

With these property investment plans, hotel brands require owners to freshen up their properties approximately every seven years. Such improvements include new carpeting, bedding, televisions and furniture. These fixes can cost approximately 5 to 10 percent of a hotel’s value.

But many hotel owners say that money is tight. They also say they’re waiting for the value of their properties to overtake the value of the mortgages they took on during the boom. These owners can borrow money to take on the renovations or refuse them and transition over to a less expensive brand with less stringent regulations. But most owners, according to the Journal, are likely to pay for the required renovations.

“If the brand lets the properties go, sooner or later you’re paying for it,” said Carlos Rodriguez, a principal at hotel management firm Driftwood Hospitality Management. [WSJ]