by Harry Wheeler
The mixed bag of the hospitality industry in 2023 can be attributed to a variety of factors. On one hand, the reopening of hotels and restaurants has increased leisure travel, contributing to a significant recovery from the pandemic-induced economic downturn. However, hotel developers are facing less promising conditions as they struggle to secure favorable deals coupled with nationwide inflationary pressures. While hotel occupancy in regional hotspots is high, construction costs present challenges to hotel development. One trend that has emerged as a result of these conditions is an increase in hospitality firms that are rebranding or reflagging existing assets with the objective to reposition a hotel property in the market, attract a new target audience, and increase revenue.
With many properties hitting their rate ceiling due to their brand or age, property owners are re-evaluating how their assets are performing, with many taking this opportunity to renovate or up-brand their real estate. As a result, firms are closely collaborating with architects and designers to explore strategies for boosting rates by improving the brand image and enhancing the guest experience. This process often involves substantial modifications to the property’s design, amenities, and service. When reflagging, meeting the standards and requirements of the new brand may require renovating guest rooms, updating public spaces, adding or upgrading facilities, and incorporating brand-specific design elements.
However, heavy rebranding also comes with inherent risks and challenges. The renovation process can be intricate and expensive, requiring significant investments in design, construction, and brand implementation. Strict timelines and guidelines must be followed to ensure a seamless transition. Furthermore, the success of this strategy depends on comprehensive market analysis, understanding the target audience, and optimizing the brand to align with the property’s location and market positioning. Proposed design changes must also comply with building codes, regulations, and industry best practices, while considering cost-effectiveness and operational efficiency.
For some companies, the current economic environment in the hospitality industry is leading them to reassess their approach to Property Improvement Plans (PIPs), which were deferred during the pandemic, rather than employing a full rebrand. These plans, mandated by hotel brands for their franchisees or property owners, outline the necessary upgrades, renovations, and improvements needed to meet the brand’s standards and maintain consistency. With rebounding leisure travel, the incentive to be lenient and offer extensions for PIPs has diminished, and brands are increasingly more rigid with their requirements.
Whether rebranding, reflagging, or renovating in accordance with PIPs, architects and designers play a pivotal role in this process. Given the high costs of renovations and construction, negotiating scopes becomes crucial, and industry experts can aid collaboration between property owners, franchisees, and brand representatives to develop design solutions that adhere to brand standards while integrating the property’s unique attributes at budget. When done successfully, brands reinvigorating their existing assets find new ways to improve the guest experience, add value to their properties, and increase revenue.
Harry Wheeler, AIA is a principal at Group One Partners.