Case Studies Hotel Remodels

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	Hotel Remodels

Hotel Remodels

Technology Category	Analytics & Modeling - Predictive Analytics Analytics & Modeling - Real Time Analytics
Applicable Functions	Business Operation Facility Management
Use Cases	Predictive Maintenance
Services	Data Science Services System Integration
Challenge	Management believed that a core brand underperformed, in part because of its outdated brand offerings. The hotel chain designed a hotel refurbishment program and began investing hundreds of thousands of dollars per hotel to update lobbies, guest rooms, and exterior signage. The brand’s management carefully tracked the performance of the initial set of “pilot” hotels but was unable to detect a clear impact on key performance metrics. Measured changes in RevPAR, occupancy, and customer satisfaction varied widely, even erratically, across the refurbished hotels. Management halted the remodel investment and reconsidered various options to address the brand’s underperformance. Read More
About Customer	An international hotel franchisor with thousands of hotels sought to enhance the aging properties of a core brand through a large-scale reinvention. The company operates globally and has a significant presence in the hospitality industry. With a vast portfolio of hotels, the company aims to maintain high standards and ensure customer satisfaction across all its properties. The company is committed to continuous improvement and innovation, leveraging data-driven approaches to optimize its operations and enhance guest experiences. Read More
Solution	The company used APT’s Test & Learn solution to evaluate the precise impact of the capital investment on each hotel. Given the small number of hotels in the “pilot” program, it was critical to take an analytical approach that minimized the measurement error inherent in analyzing week-to-week changes in performance. APT’s refined measurements clearly identified incremental RevPAR and improvement in guest satisfaction. The confirmed increase in RevPAR made the capital investment attractive to hotel franchisees. APT’s analysis also confirmed that the remodel activity was not cannibalizing surrounding same-brand hotels, and that the incremental business was coming from nearby competitors. In addition, APT used guest data to identify the specific guest segments that the remodel program influenced the most. The company targeted these segments to enhance the program’s returns. Finally, APT identified the characteristics of hotels that were particularly well positioned to benefit from the remodel and therefore likely to generate above-average returns. The company used this analysis to determine which hotels should be prioritized for an earlier remodel, allowing all stakeholders to capture larger profit opportunities earlier in the remodel program. Read More Log in to view content
Contents

Technology Category

Analytics & Modeling - Predictive Analytics

Analytics & Modeling - Real Time Analytics

Applicable Functions

Business Operation

Facility Management

Use Cases

Predictive Maintenance

Services

Data Science Services

System Integration

Challenge

Management believed that a core brand underperformed, in part because of its outdated brand offerings. The hotel chain designed a hotel refurbishment program and began investing hundreds of thousands of dollars per hotel to update lobbies, guest rooms, and exterior signage. The brand’s management carefully tracked the performance of the initial set of “pilot” hotels but was unable to detect a clear impact on key performance metrics. Measured changes in RevPAR, occupancy, and customer satisfaction varied widely, even erratically, across the refurbished hotels. Management halted the remodel investment and reconsidered various options to address the brand’s underperformance.

About Customer

An international hotel franchisor with thousands of hotels sought to enhance the aging properties of a core brand through a large-scale reinvention. The company operates globally and has a significant presence in the hospitality industry. With a vast portfolio of hotels, the company aims to maintain high standards and ensure customer satisfaction across all its properties. The company is committed to continuous improvement and innovation, leveraging data-driven approaches to optimize its operations and enhance guest experiences.

Solution

The company used APT’s Test & Learn solution to evaluate the precise impact of the capital investment on each hotel. Given the small number of hotels in the “pilot” program, it was critical to take an analytical approach that minimized the measurement error inherent in analyzing week-to-week changes in performance. APT’s refined measurements clearly identified incremental RevPAR and improvement in guest satisfaction. The confirmed increase in RevPAR made the capital investment attractive to hotel franchisees. APT’s analysis also confirmed that the remodel activity was not cannibalizing surrounding same-brand hotels, and that the incremental business was coming from nearby competitors. In addition, APT used guest data to identify the specific guest segments that the remodel program influenced the most. The company targeted these segments to enhance the program’s returns. Finally, APT identified the characteristics of hotels that were particularly well positioned to benefit from the remodel and therefore likely to generate above-average returns. The company used this analysis to determine which hotels should be prioritized for an earlier remodel, allowing all stakeholders to capture larger profit opportunities earlier in the remodel program.

Impact #1	Management was able to recruit additional franchisees to participate in the remodel program by demonstrating the attractive returns that resulted from the first round of remodels.
Impact #2	As additional remodeled hotels yielded the projected level of benefits, the company continued to aggressively remodel the remainder of the portfolio.
Impact #3	Using Test & Learn for Sites, management could also identify which components of the capital investment should be undertaken on a site-by-site basis.

Impact #1

Management was able to recruit additional franchisees to participate in the remodel program by demonstrating the attractive returns that resulted from the first round of remodels.

Impact #2

As additional remodeled hotels yielded the projected level of benefits, the company continued to aggressively remodel the remainder of the portfolio.

Impact #3

Using Test & Learn for Sites, management could also identify which components of the capital investment should be undertaken on a site-by-site basis.

Benefit #1	The remodel initiative drove $100MM of net present value for franchisees.

Benefit #1

The remodel initiative drove $100MM of net present value for franchisees.

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Overview

Hotel Remodels

Operational Impact

Quantitative Benefit