The Nine Circles of CapEx Spreadsheet Hell

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Most hotel owners will be receiving 2018 CapEx plans from their hotels in the next few weeks.  Most of those CapEx plans will be submitted on Excel spreadsheets.

This is a perfect time (maximum pain levels) to consider The Nine Circles of CapEx Spreadsheet Hell, and develop strategies for a move to CapEx Planning Paradise.

• What is wrong with using CapEx planning spreadsheets?
• What are the alternatives?
• What specific steps should owners and operators take?

Avoid CapEx Spreadsheet Hell!

Read this article:

Highest and Best Use – CapEx Part III – CapEx Spreadsheet Hell

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R-A Associates was established in 2005 to provide hotel owners and operators with 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.

R-A Associates, LLC is associated with

, The Global Network of Independent Hospitality Professionals.

CapEx Math 101 – Useful Life

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Have you ever gotten a CapEx request that listed “exceeded useful life” as the primary reason for the asset’s replacement?

Highest and Best Use of owner’s capital is only achieved when the useful life of capital assets is MAXIMIZED.

• What is “useful life”?
• How should “useful life” be evaluated in capital asset replacement decisions?
• How do you maximize “useful life”?

Anyone responsible for planning or managing capital expenditures should understand how useful life affects CapEx decision making.

Here is a link to a short article that will tell you everything you need to know about “useful life”:

Highest and Best Use – CapEx Part II – CapEx Math 101 – Useful Life

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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.

R-A Associates, LLC is associated with

, The Global Network of Independent Hospitality Professionals.

What’s a CapEx, and why should I care?

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Most hotel management companies and hospitality asset owners are at the front end of CapEx planning for 2018 and beyond.  Most participants in this planning will ask themselves, at one point or another; “Is CapEx planning a horrible waste of my time?”

Surprisingly, the answer is often “Yes”, but in only specific situations:

• Whenever the CapEx plan is not aligned with the property owner’s investment strategy, it is a waste of time,
• Whenever the CapEx plan does not address all the capital needs of the property, it is a waste of time, and
• Whenever the CapEx plan contains poorly defined scope of work, inaccurate budgets, or incorrect information, it is a waste of time.

For any smart hotel owner, and any smart management company, CapEx planning is absolutely worth doing, and absolutely worth doing well!

Why?
Here is a link to a short article that will tell you what a “CapEx” is, and why CapEx planning is important:

Highest and Best Use – CapEx Part I – What’s a CapEx, and Why Should I Care?

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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.

R-A Associates, LLC is associated with

, The Global Network of Independent Hospitality Professionals.

Let’s Talk CapEx

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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.

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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.

 

R-A Associates, LLC has relocated to Denver.

R-A Associates was founded in 2005 by its two principals, Thomas Riegelman and Susan Achinapura, and 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.

R-A Associates, LLC, the hospitality facilities management/asset management advisory firm, has published its new web site today at: R-Aassociates.com

R-A Associates was founded in 2005 by its two principals, Thomas Riegelman and Susan Achinapura, and provides advisory and management services related to hospitality property planning and design, facilities operations, and CAPEX. Contact information is listed at the website Here.

The consulting practice is associated with CAYUGA HOSPITALITY CONSULTANTS, The Global Network of Independent Hospitality Professionals.