U.S. Hotels Are Spending HOW MUCH This Year?!

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The U.S. hotel and lodging industry is expected to set another record for capital expenditures in 2015, up 7 percent from the year-earlier.

The U.S. hotel and lodging industry is expected to spend a record $6.4 billion in 2015 on capital expenditures, up 7 percent from the previous year. This year-over-year jump is due, in part, to response to online customer feedback, according to a study released Tuesday by New York University’s School of Professional Studies.

“In addition to brand standards influencing capital expenditures, social media postings are resulting in additional capital expenditures as owners become more aware of and respond to criticisms and unfavorable comments,” a portion of the report reads. “This effect became significant starting around 2012 and continues to increase.”

The hotel industry has seen an increase in capital expenditures every year since 2010.

Meanwhile, hotels are making large investments audio and visual (A/V) equipment for meeting and function rooms.

“The trend of outsourcing those services and receiving a commission from A/V providers for revenue generated from meetings and events continues to grow,” the report said.

The report defines “capital expenditures” as costs incurred from the purchase and installation of capital assets to maintain and enhance hotels. For example, wall coverings and carpeting upgrades and replacements are capital expenditures, while painting is generally not.

Other capital expenditures include:

• Significant changes to bathrooms: replacing tub/shower units with walk-in showers
• New or enhanced fitness facilities
• Redesigned lobbies, primarily to appeal to Millennials and to compete with competitor lobby models
• Increased high speed internet capacity/bandwidth
• Re-conceptualized restaurants and food concepts which appeal to Millennials while reducing operational costs
• New or enhanced in-room amenities: irons/ironing boards, coffee makers, upgraded radio/alarm clocks/sound systems, iPads and art
• Flat-screen televisions
• Technology, including upgraded revenue management systems and systems/equipment to support social media initiatives

Many brand- and independent-management contracts establish percent of revenue amounts — allocated to capital expenditures or to a reserve fund for longer-term projects.

Bjorn Hanson, Pd.D., clinical professor at the NYU School of Professional Studies, authored the study. The study estimates are based on interviews with selected hotel executives, brand and management company representatives and design and construction executives, an analysis of brand standards, and other sources such as press releases and media reports.

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