Record Capital Expenditures Expected from U.S. Hotels in 2017

Spending on capital expenditures by the U.S. lodging industry this year is expected to reach a record $6.85 billion, a 3.8 percent year-over-year increase, according to a report from Bjorn Hanson, a clinical professor at the NYU School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism.

With U.S. lodging industry revenue per available room projected to grow between 2 percent and 2.5 percent, Hanson said capex "could increase between 60 and 70 percent more than the percent increase in RevPAR."

Enhancements to hotel properties, such as converting a tub/shower unit to a walk-in shower or updating the bedding, typically fall under capex. The priorities for capex spending this year include: redesigned lobbies; increased Internet speed and bandwidth; new restaurant and food and beverage concepts; updated in-room amenities, including ironing boards, coffee makers, iPads and decor; larger flat-screen televisions; upgrades to A/V equipment; improved revenue management and property management systems; and equipment to support social media initiatives.

Many of these improvements, Hanson said, are expected of hotel owners and franchisees to keep up with brand standards set by hotel companies. He said guests' social media posts about property design, amenities and quality form a somewhat new but persistent influence on capex.

Hanson's findings are based on interviews with select hotel executives and hotel design and construction executives, analysis of brand standards, and other sources, including press releases and media reports.