Hotels are unique and diverse assets and each renovation project comprises of variable data and metrics that influence the decisions that need to be made. There is no one size fits all, even among hotel brands or chain scales in the same location. This ultimately means that hotel renovation models or cost guidelines give no more than a broad range as scope, methodology, as costs vary greatly with individual projects.
Stakeholder Engagement
Delivering a successful Hotel Renovation Project is about assembling the right team at the right time, with the right level of commitment, authority, and expertise to drive the process.
A Project Stakeholder is typically defined as, ‘anyone that can affect, or is affected by a project, because they are involved in the work, or are affected by the outcome’.
In the context of this insight we will therefore consider, the Owner, or Investor, the Operator team, the Consultant team, and even the Contracting organisations, as integral to establishing the goals. Metrics can be established and aligned with each of these parties.
Some project stakeholders will be required to produce or commit to metrics, whilst others will be required to input data on the practical aspects of the planned renovation works. It is clear that a project can be instigated from various parties and for various assumed reasons, but one aspect remains constant throughout, and that is the alignment to the individual stakeholder’s needs and wants, and the return on the investment made.
It is important to define the stakeholders at the outset and to establish roles and responsibilities so that the requisite information gathering can be effective and relevant to the proposed project. Remember the point is to get to the bottom of the issues and not simply guess a solution without being informed.
Stakeholder engagement is the interaction with, listening and understanding of the project stakeholder’s requirements to the overall benefit of the project. The stakeholder’s view of a completed project usually determines the relative success of the project. With a measured approach to the use of metrics, the stakeholder’s requirements are considered at the outset, therefore providing a measure for success.
Stakeholder Engagement differs from Stakeholder Management, which typically defines the systematic approach, planning and implementation designed to engage with the Stakeholders.
Stakeholder engagement is not a standalone activity, it should be about a single focus on an end goal. Good active stakeholder engagement also reduces disputes.
It is also important to engage with the supply chain at an early stage. Getting advice from a contractor in terms of buildability or a condition survey will often uncover issues or drive efficiencies into the process. One of the main issues with any renovation project is that everyone works hard to define the scope, align metrics, and then allows the market to define the cost of the work. In this scenario, the dreaded, and so-called, value engineering (VE) process begins. This is only about compromise, cost-cutting and delay, it has no relevance in the context of a well-defined strategy.
Value Management
The primary focus here is value maximisation, achieved by delivering effective and timely strategies. The earlier in the process that the key metrics and drivers are developed the greater the potential for added-value, reduced cost and time, increased returns and improved efficiency and functionality.
Value management consultancy is not value engineering, or cost-cutting, but adding real value into an asset from the start. The cost-saving (value maximisation) potential is greatest at the outset, as you define strategy. As you enter the tender and construction phases it is equally true that ‘value’ becomes cost-cutting.
Risk Management
The management of risk within a project is wider than simply the perceived threats or uncertainty to successful delivery. Risk management is a mind-set to view the overall project and to ensure risks to time and cost are mitigated through a clear and concise delivery strategy, with a balanced view of the metrics.
One of the defining elements of any project is uncertainty. The amount of risk increases with the amount of uncertainty, and uncertainty is inherent in all renovation projects. Risk management processes are therefore utilised in the prediction, identification and mitigation of risks which will increase the likelihood of a successful project by protecting the metric and budget targets.
Risk management should start as soon as a project has been initiated. The greatest opportunity for managing risks is in the early stages of a project. If the project is impacted due to a risk occurrence the impacts to budget and schedule can be extremely costly.
The risk management process begins with the evaluation of risks through the assessment of the project objectives, scope, design documents, experience on projects of a similar nature as well as preliminary budgets and schedules. A thorough list of potential project risks should be generated. If these can be identified a greater potential for project success is likely.
Once risks are identified they need to be included in a risk register or risk matrix for further evaluation. Each potential risk undergoes an assessment of prioritisation and is then evaluated by a qualitative assessment with those risks that have the greatest potential for project impact undergoing a quantitative analysis.
Once risks have been identified, risk triggers and individuals responsible for monitoring their assigned risks need to be aligned.
Phasing Strategy
The phasing of the work needs to be considered with a view to the proposed scope of the works and the hotel's occupancy. Phasing has a two-fold impact. The renovation in any given year should be designed to have the rooms in service as early as possible to maximize the potential revenue, however, the work also needs to consider revenue protection during the works so as not to risk losing further revenue and affecting the guest experience.
Phasing is wholly dependent on strategy, scope, and occupancy levels for each individual project.
The overall success of the renovation strategy will be borne out through the avoidance of delays and compromise, which are often instigated through value engineering exercises and projected cost overruns before projects have even started.
About the author: Paul Boldy, RLA Global Middle East Managing Director
Paul has worked across the Middle East and Africa for the past 16 years, representing operators, owners and developers with feasibility studies, technical and design services, renovation, and improvement plans and operational consulting services for various hospitality and leisure assets. A thought leader in the Hospitality Sector, Paul has helped shape Hotel projects across all stages, from development to design and through pre-opening to operation, representing the full life cycle of the hotel asset with dynamic results.
