Dallas City Wire

The renovation of an Embassy Suites hotel in Washington, D.C. has been delayed by up to two years due to COVID-19, according to the CEO of Washington Capital Management.

“We were planning to spend about $22.7 million and we've delayed about $6 million of it to $21 million,” Cory Carlson told the Dallas City Wire. “We can't rationalize spending that money when we don't have anybody in the hotel.”

Instead of hotel room renovations, Carlson said his company is investing in distribution space during the coronavirus slowdown.

Cory Carlson

“The biggest area we're spending money on right now is industrial space with everybody staying at home and ordering online, the demand for industrial space or distribution space is huge,” he said.

Washington Capital Management is among many hoteliers that have delayed room renovations while also seeing a recent uptick in simple construction projects.

“One of the problems with renovations is you displace the potential to rent rooms,” he said. “You're not having that problem today.”

Simple renovations include public spaces, lobbies, exercise rooms, swimming pools and meeting rooms.

“I think you're seeing new carpet and new tiles because you have fewer people that you're displacing,” Carlson said in an interview.

In fact, five of seven Washington Capital Management properties are undergoing construction activity, which involve interior designers, procurement firms, project managers and architects.

Premier Project Management (PPM) is Carlson’s preferred project management company.

“Most of the time, you hire a construction manager from one firm and an architect from another firm but, in this case, Premier provides both those services and the communication between project management and the architect is more direct,” he said. “I think they work together well.”

PPM has more than 260 years of experience in its leadership team alone and currently oversees more than 120 properties, according to CEO Hector Sanchez. 

“Our team’s ability to collaborate due to having all of design, architecture, procurement, construction management and project management services in-house has allowed us to be extremely flexible with schedule changes as well as coordinating efforts throughout our team,” Sanchez told the Dallas City Wire.

Sanchez is particularly encouraged by the development of a vaccine for the coronavirus.

“With the progress on the vaccine underway I believe that ownership groups are beginning to see that travel will begin to increase heading into Q2 of next year,” he said. “They are beginning to have conversations about starting projects that were on hold. There has also been an increase in buying and selling of hotels and there is definitely renovation work that will take place once these transactions are finalized.”

Sanchez foresees that as soon as 2022, brands will start enforcing PIP timeline requirements.

“One of the services that Premier offers is corporate engineering,” he said. “The primary role is to support hotels on any technical issue that the property has with regards to capital equipment, chillers and boilers. They have been critical with many ownership groups figuring out how to extend the life of capital equipment instead of replacing.”

Blueprint Hospitality CEO Kunal Mody is also a fan of PPM, although there is no renovation work in the pipeline.

“We have a really, really great relationship with Premier,” Mody told the Dallas City Wire. “We've thought about opportunities in the future where we are picking up assets and converting them but the window hasn't really opened up and it's hard to say when it will.”

Mody’s uncertainty about renovating is due to the pandemic.

“What happens when we have a vaccine and case levels are low again? Will people rush out or will there be a moment of hesitation? My guess is that there won't be a moment of hesitation,” Mody said. “I think people all want to move around. I think our country is built on people effectively moving throughout our country for work and pleasure all the time.”

Blueprint Hospitality's portfolio of hotels is located in Texas and Arkansas.

“We’re mostly in the new development phase of our company and so the few hotels that we own or have acquired over the last few years just did not require massive renovations ongoing,” Mody added. “We're still doing mostly routine maintenance but nothing that was planned to be done as a renovation has hit our hotels as of yet.”