Let’s Talk CapEx
Time for a CapEx Discussion
CapEx is an important subject for all hospitality asset owners, and for their management companies, asset managers, and operators. According to the ISHC CapEx 2014 Study, capital expenses consume between 4% and 10% of a hotel’s gross revenue, every year. There is variation in these percentages by property type, age, location, and ownership, but in every case, CapEx is a material expense to every hotel asset owner;
- material,
- important,
- strategic.
What will we talk about?
Over the years, I have managed CapEx as a brand executive, operator, asset manager, construction/project manager, developer, and owner. From all perspectives, and at all levels, there are opportunities to improve the planning, administration, and execution of capital expenditures, and to drive the highest and best use of scarce owner’s capital.
The view of CapEx is different from each perspective (not a surprise), and industry practice and financial regulation have resulted in some interesting and unfortunate misalignment of interests between owners, asset managers, operators, and the brands. Some of these misalignments seem to have become “structural” in industry practice over time, and in many cases written into franchise agreements, management contracts, accounting standards, and tax regulation.
Let’s make it a conversation!
Over the next few months, I will post a series of short articles about CapEx, and explore some of the issues and opportunities to improve hotel owner’s return on their CapEx investment. I hope these posts spark some discussion on the subject, and I look forward to hearing your thoughts, questions, and comments.
R-A Associates provides management consulting services focused on creating and sustaining the long term value of hospitality real estate assets.
- Property Planning and Design,
- Facilities Operations, and
- CAPEX.
Contact us Here.
The consulting practice is associated with CAYUGA HOSPITALITY CONSULTANTS, The Global Network of Independent Hospitality Professionals.