How We Approach PIP Planning

Written By Stephanie Kountis

Smart CapEx for Long-Term Value

Property Improvement Plans (PIPs) are often misunderstood as burdensome expenses. At Spark GHC, we view them as strategic opportunities to future-proof assets, reinforce brand alignment, and maximize lifecycle value with disciplined budgeting and thoughtful execution.

Here’s our blueprint for making PIP-driven CapEx a smart investment, not a cost center.

1. Strategic Purpose: Beyond Compliance

PIPs ensure brand conformity, but done right, they’re catalysts for guest satisfaction, ESG positioning, and competitive differentiation. As GLR puts it, every PIP upgrade, from HVAC systems to lobby finishes, can “increase operating profit and asset value.” Not just brand-keeping, this is asset elevating.

2. Four-Step Planning Framework

We apply a robust process rooted in industry best practices (see Pinnacle/NEREJ).

A. Full Property Evaluation
Start with a Property Condition Report (PCR) and brand-issued PIP checklist to benchmark critical mechanical, FF&E, and guest experience areas.

B. Design a Long-Term CapEx Roadmap
Develop a 10-20-year cycle plan, mapping FF&E lifespans, systems upgrades, and refresh cadence. Allocate ~8% of revenues over 10 years, as benchmarks suggest.

C. Funding Strategies
Blend reserves with targeted equity infusions or refinancing to handle uneven CapEx cycles. Avoid tying up too much cash in reserve or leaving assets underfunded .

D. Ongoing Monitoring
Update the plan annually, review cost inflation, evolving brand requirements, and asset condition to realign priorities.

3. Smart Timing & Phasing: Minimize Disruption, Maximize Upside

  • Off-Peak Execution: Renovate during low-demand periods (e.g., Q1 in secondary markets) to mitigate revenue loss .

  • Exit Preparation: Time PIP completion 12-18 months before sale or reflag to enhance market valuation.

  • Inflation Buffering: Lock in pricing early on long-lead or volatile materials to protect margins.

4. Value Engineering Meets Brand Standards

CapEx investments should strike a balance between cost discipline and brand fulfillment:

  • Involve ownership, design teams, brand reps, and contractors early for alignment and innovation.

  • Leverage emerging efficiency strategies: LED lighting, zoned HVAC, pre-fab bathroom pods, antimicrobial surfaces, and smart energy systems.

  • Prioritize upgrades with dual benefits: aesthetic uplift and Opex savings, for example, energy systems or durable finishes.

5. Negotiation: Smart Pushback on Brand Demands

Brands want uniformity, but negotiation based on data can yield flexibility:

  • Document actual wear and lifecycle (e.g., soft goods less than 7 years old may not need replacement) and present audit-backed requests to extend cycles.

  • Emphasize metrics like QA scores, brand brand equity, and guest satisfaction when pushing for phased or deferred PIP elements.

  • Employ project managers with brand relationships; often they’re key in getting concessions on deadline or scope.

6. Optimize ROI

Smart PIP planning aligns CapEx with returns:

  • Schedule asset refreshes 12-18 months before sale to capitalize on valuation uplift.

  • Emphasize cost metrics such as utility savings from upgrades, shortened downtime, and improved guest value perception.

  • Use market-timed announcements and pricing campaigns to drive ADR lift post-renovation.

7. Execution Discipline

Detailed execution planning ensures efficiency:

  • Always renovate a room or public area just once. Consolidate deliveries, staging, and labor.

  • Build 12–14 months lead time for contractor engagement, permitting, and materials.

  • Coordinate closely with workforce systems to avoid labor + build overlap and guest disruption.

PIPs as Strategic CapEx

By combining a long-term roadmap, funding flexibility, value-engineering creativity, brand negotiation, and disciplined execution, PIP planning evolves from a tick-box exercise to strategic CapEx:

  • You protect and boost asset value.

  • You reduce operating costs via efficiency investments.

  • You enhance guest experience and market positioning.

  • You improve ESG credentials and investor appeal.

  • You optimize timing for ownership exit or reflag upside.

We embrace PIPs not as obligations, but as opportunities to cement the asset’s future. When CapEx is planned smartly, every PIP becomes a driver of long-term ROI.

Sources:

Stephanie Kountis
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