Hotel Renovation To Hit Six-Year High

The U.S. lodging industry will spend $3 billion on renovations in 2004, according to projections released today by consultants PricewaterhouseCoopers. "This represents the highest level of capital expenditures since 1998," said Bjorn Hanson, who heads PwC's hospitality and leisure practice.

The high level of investment indicates growing confidence on the part of the industry that the two-year downturn in revenues may be over and that the time is right to start to invest in upgrades.

Buyers generally support property renovations up to the point hotels use the investment as a justification for rate increases. Renovated hotels, after all, tend to elicit fewer complaints from travelers.

During the downturn, capital expenditures frequently were limited to necessary repairs to hotel infrastructure, which the guest typically wouldn't see. By contrast, the improvements being scheduled for 2004 are more visible to the guest on a day-to-day basis.

Hanson listed five categories of improvement that he sees as most likely, including: improved bedding, upgraded televisions, more customized architecture, the installation of high-speed Internet access and better signage.