Some Hotels Struggling to Upgrade Finishes Amid Market Challenges

New York, NY, November 29, 2022-"Delayed renovations, labor shortages, supply-chain snarls and general wear and tear are colliding with record-high room rates, leaving some [hotel] guests frustrated by what they feel are rooms undeserving of hefty price tags,” reports the Wall Street Journal.

“Hotel rooms cost an average of 13% more compared with the same period in 2019, according to hospitality data and analytics company STR. The latest consumer-price index showed prices for the lodging away from home category that includes hotels and motels rose 5.6% in October from September.

“‘We’re in this environment where room rates are much higher and some rooms haven’t been taken care of because there was no money there from the owners. So what that leads to is likely guest satisfaction scores that are going down,’ says Jan Freitag, national director for hospitality analytics at data firm CoStar Group.

“Guest complaints regarding a range of issues, including air conditioning, room maintenance and shower drainage, have risen 3 percentage points compared with 2019, according to the most recent J.D. Power North America Hotel Guest Satisfaction Index. This year’s survey polled over 34,000 hotel guests for stays between May 2021 and May 2022. That suggests thousands of more complaints across the industry, according to Andrea Stokes, J.D. Power’s hospitality practice lead.

“Supply-chain issues and staffing shortages have affected routine preventive maintenance programs at the hotel, according to an emailed statement from general manager Kevin Watson. He added that renovation and refurbishment plans are in development, and guest satisfaction is the highest priority.

“Hyatt is working closely with this hotel to ensure the guest experience meets the brand’s standards, Paul Daly, the company’s senior vice president of global franchise operations and owner relations, wrote in an email statement.

“While some big properties used the pandemic to get ahead on renovations, most were trying to survive as bookings plunged. Many put funds typically reserved for improvements toward expenses such as leases. Even those with the funds to make improvements had to navigate a dearth of available workers and Covid restrictions, analysts say.

“Now, managers and hotel companies are struggling to find affordable contractors. Many hotels are still hiring for maintenance roles. In a recent survey from the American Hotel & Lodging Association, 13% of hoteliers said maintenance was their top job category in terms of hiring need. In the survey, 42% called housekeeping their top need.

“Companies are also navigating supply-chain disruptions from Covid-19 closures in China, which affects mass-produced furniture and carpets, says Truist securities analyst C. Patrick Scholes. Hotel managers must account for renovation costs that could be 30% to 50% higher than prepandemic costs, he says.

“Major hotel brands pushed back requirements on maintenance and other quality-assurance standards when their franchised hotels were struggling, analysts say.

“In an earnings call last week, Marriott International Inc. chief executive Anthony Capuano said the company has brought back its quality-assurance audits. The company says that because of continued challenges facing hotel renovations, it has extended the grace period on renovation accountability.

“Some wear and tear has been unavoidable, even for hotels that saw a steep drop in customers, says Alan Benjamin, president of Benjamin West, a furniture, fixtures and equipment purchasing firm.

“‘The wind and rain and sun did not care if your occupancy was 0% or 100%,’ he says of exterior and building systems, such as window seals, roofs, boilers and elevators.

“Hotels typically renovate or convert 300,000 rooms in the U.S. each year out of the approximately 5.5 million available, says Bruce Ford, director of global business development at research firm Lodging Econometrics. This year, the number being renovated is likely 20% to 25% higher. The cycle will likely continue for the next year or two as more rooms are in need of renovation, he says.

“The condition of hotel rooms will improve, but guests need to be patient, Mr. Benjamin says. If you plan to book several rooms for an event like a wedding or reunion, he suggests checking out the property in person to make sure it’s as good as it looks in the pictures.”