PwC: Hotels To Increase Investment In Improvements

The U.S. lodging industry in 2004 will spend $3 billion on renovations, representing the highest level of capital expenditures in six years, according to projections released this month by PricewaterhouseCoopers.

The high level of investment—earmarked for infrastructure improvements and accommodation upgrades—indicates growing confidence on the part of the lodging industry that the two-year downturn in revenues may be over and that the time is right to begin investing in renovations.

"Many lodging owners will need to catch up on maintenance spending in the coming years," said Keith Mills, lodging industry analyst at UBS. "Since the third quarter of 2001, many hotel companies dramatically reduced such spending in order to conserve capital." He added that while many properties are in need of just a "simple refreshing of the room décor, others require a complete overhaul."

Bjorn Hanson, head of PwC's hospitality and leisure practice, listed five categories of improvement he expects will be most common: improved bedding, upgraded televisions, more customized architecture, the installation of high-speed Internet access and better signage.

Bed upgrades already have proven popular. Both Sheraton Hotels & Resorts and Crowne Plaza Hotels & Resorts, two upscale brands, last month announced improved beds systemwide. By the end of 2004, Sheraton expects to have its new Sheraton Sweet Sleeper bed in 70,000 rooms in 200 of its North American properties. An additional 40,000 beds will be installed later. Starwood's total investment is $75 million.

At Crowne Plaza, new beds are being installed in guest rooms, along with such sleep aids as ear plugs and eye masks.