Hotel owners set to spruce up properties


The lobby of the Hilton McLean Tysons Corner after a major remodeling project. (Jeffrey MacMillan/For Capital Business)
December 11, 2011

A steady recovery in the hotel industry has spurred a wave of renovation projects, a trend likely to pick up speed in the coming year.

Hotel owners placed planned upgrades on the backburner as bookings dwindled and room revenue dried up three years ago. Now that travelers are back in the market with a full suite of options to choose from, hoteliers are sprucing up their properties to remain competitive.

Upgrades on lobbies, bathrooms and bedrooms are expected to ring in at $3.5 billion this year, 30 percent more than 2010, according to Bjorn Hanson, divisional dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports. This marks the first increase in renovation activity since 2008, when hotel upgrades topped $5.5 billion.

“Some of the projects being proposed for next year are being re-scaled, so it’s difficult to pin down a projection. But there will definitely be an increase in the volume of renovations,” he said.

The resurgence of demand and pricing power also sparked a flurry of hotel sales since 2010. Through the nine months ending September of this year, research firm Real Capital Analytics said hotel sales soared 122 percent to $14 billion.


The hotel’s new Technology Lounge has several computers for guests to use, along with a printer and video wall. (Jeffrey MacMillan/For Capital Business)

“People are purchasing, rather than building, because of the lack of construction financing,” said Robert Mandelbaum, director of research for Colliers PKF Hospitality Research. “These purchases are often done with the intention to reposition the property, which requires renovation.”

In the Washington area, three renovation projects are either underway or slated to start within six months and another four in the early planning stages, according to research firm Lodging Econometrics.

One of those projects is the $30 million renovation of the Capital Hilton, a 544-room hotel in downtown D.C. Work began in 2010 and is set to conclude in early 2012 on an updated lobby and bar, according to Andrew Flack, vice president of global brand marketing for Hilton Hotels & Resorts.

He said the company is wrapping up its $45 million renovation of the Hilton McLean Tysons Corner, which included remodeled rooms, the addition of Harth restaurant and a swank lobby redesign. The upgrades are part of a larger three-year, $3 billion renovation program under way across Hilton Hotels & Resorts’s global portfolio.

“When you’ve been around a while, like we have, you need to continually invest in relevance in your properties,” Flack said. “Customers’ expectations around design is higher than its ever been. There should be something about the hotel experience that feels better than home.”

An earlier version of this story incorrectly said renovation work on the Capital Hilton would begin in 2012. It will end then. The work also does not involve the rooms and restaurant, but the lobby and bar area.

Danielle Douglas covers the banking industry for The Washington Post.
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