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Planning, Communication Are Keys to Successful Hotel CapEx

Bynewsmagzines

May 9, 2023
Davidson Hospitality Group's Paul Eckert and JLL's Lori Horvath speak at the Hospitality Asset Managers Association's Spring 2023 Conference. (Sean McCracken)


SAN FRANCISCO — Issues with supply chains and construction labor shortages have eased somewhat, but alignment from top to bottom is still key to get the most out of big capital-expenditure projects at hotels.

Speaking during the “CapEx 2023 Report: Summary & Best Practices” session at the Hospitality Asset Managers Association’s Spring 2023 Conference, Lori Horvath, managing director for JLL’s hospitality project management practice in the Midwest, said solid planning early on is what determines success at completion.

“The first 30 or 60 days depending on the scale and complexity are so key to the success,” she said. “It’s about sitting down with owners and management teams and understanding all the nuances and deliverables that are required so that we can have a baseline scope, schedule and budget beyond what was articulated in the [request for proposal].”

She added it’s importabt to assemble the right team to guide the project.

Horvath said once that team is assembled, everyone can get together to identify the real goals of a project so everyone is on the same page. She said without that, each individual could have a different understanding of what they’re trying to accomplish.

“There are [return on investment opportunities] that are on the list from when the project starts and things that are addressed within alternate [plans] and validated by the project manager from the very beginning,” she said. “Then there are the big ideas that come from the [general manager] or ‘If we have a little extra money, how can we spend it?’ So those things get thrown into the mix, and that’s where from a project management perspective, we’re looking at costs and evaluating ROIs and also we’re looking at this perfectly and beautifully planned schedule we’re putting together. And that’s where those big ideas go out the window.”

Maxine Taylor, executive vice president with CHMWarnick, said keeping projects focused and on-budget requires establishing how the team communicates and understanding who the real decision-makers are.

“One of the frustrations in our industry is a lot of the times the [general manager] has more access to the project manager than the owner or the asset manager,” she said. “That gets a little frustrating when the GM starts to give direction that we weren’t aware of. It’s hard to control that. … You need to make that point up front that there are only certain people that can change the scope, and that really is the owner.”

Alan Benjamin, founder of Benjamin West, agreed that project managers for any capital-expenditure project should be clear on who their point of contact is.

“It doesn’t matter who it is, but make sure everybody knows who it is and that’s really clear,” he said.

Paul Eckert, senior vice president of operations for Davidson Hospitality Group, said he’s learned over time that “the best way to live” is to overcommunicate during these intensive projects.

He said that starts with getting a clear understanding of “what the owner is trying to accomplish” on a project.

“What is the hold period, when do they want to exit or is this a long-term hold? Is this an alley of asset-valuation improvement?” he said. “Once we understand what they’re trying to accomplish, it could be a small project like an ancillary amenity being added, an entertainment venue or all the way up to a complete repositioning, then we engage our strategic operations team once we know what we want to accomplish.”

Horvath said communication remains key, especially when problems arise that weren’t planned for.

“One of the things we need to know is if there’s a change of schedule it could be moving into peak periods, so that’s going to have a big financial impact in terms of displacement,” she said. “We’ll just have to talk through that on the best way to do” the project.

Read more news on Hotel News Now.

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