The Importance of Phased Renovations for Operational Hotels

Why Closing Your Hotel for Renovations Is No Longer an Option

Every hotel owner faces a dilemma: the need for upgrades versus maintaining revenue. Full closure results in zero income during renovation periods, while staying open without proper planning risks guest dissatisfaction. Industry reports indicate that hotels implementing phased renovations can maintain 75-85% of normal occupancy, effectively preserving revenue streams during construction phases.

What Is a Phased Renovation?

A phased approach divides upgrades into manageable stages, allowing parts of the hotel to operate while others are under renovation. For example, renovations may focus on select floors, wings, or room categories sequentially, ensuring continuous availability and minimizing revenue loss.

The core principle: Never renovate more than you can afford to lose in occupied inventory. Strategic sequencing keeps revenue flowing while steadily improving your entire property.

The Real Cost of Full-Closure Renovations

Calculating the financial impact for an 80-room hotel with a $120 ADR and 70% occupancy emphasizes the benefits of phased work:

• A full 3-month closure could lead to revenue losses of approximately $605K, with total costs including fixed expenses reaching $700K-$900K.
• In contrast, maintaining 75% occupancy through phased renovations reduces that loss to around $151K, saving approximately $450K-$550K.

The Business Case for Phased Renovations

Phased renovations provide multiple advantages:

• Continuity of cash flow, crucial for covering operational costs and avoiding expensive bridge loans.
• Reduced financial risk by allowing testing and adjustment of renovation strategies on smaller sections.
• Brand reputation protection through ongoing guest engagement and experience management, which research shows correlates with minimal review score declines (~0.4 points) if transparency is maintained.
• Faster ROI as renovated rooms can command premium pricing immediately, generating quicker revenue recovery and improved reviews.

Planning a Successful Phased Renovation

Step 1: Assess your property layout for optimal phasing based on floor plans or building wings. Work with your contractor to identify the best phasing sequence for your specific property configuration.

Step 2: Analyze occupancy patterns, scheduling work during slow seasons or off-peak months. Example schedule:

• Phase 1 (January-March): Renovate 25% of rooms during slowest season
• Phase 2 (April-June): Continue with next 25% before summer rush
• Phase 3 (September-November): Complete final rooms post-summer
• Public spaces (December): Tackle lobbies during lowest occupancy

Step 3: Create construction zones, that minimize guest disruption with signage, barriers, and separate entrances. Guests should barely know renovation is happening.

Step 4: Sequence work strategically, start with less visible areas, finishing high-impact spaces last, with buffers of 1-2 weeks for inspections.

Step 5: Manage the guest experience and notify guests during booking, offer alternative dates or discounts, set clear expectations. Assign renovated rooms to loyalty members, keep non-renovated rooms far from construction, provide amenity compensation proactively.

Common Phased Renovation Strategies

Strategy 1: Floor-by-Floor

Complete one full floor before moving to the next. Best for hotels with 3+ floors. Timeline depends on work scope, but usually may take 20-26 weeks.

Strategy 2: Wing-by-Wing

Renovate entire sections separately. Particularly effective for properties with physical separation between buildings or wings.

Strategy 3: Room-Type Rotation

Renovate by category (standard rooms, then suites, then premium rooms). Allows maintaining variety for guest preferences throughout.

Strategy 4: Odd-Even or Checkerboard

Renovate every other room or alternating corridor sides. Slower but maintains maximum inventory and ideal for peak season.

Managing Costs in Phased Renovations

Although per-room costs can rise by 5-10% due to multiple mobilizations, revenue savings outweigh these expenses. Proper planning includes contingency budgets of around 15% for initial phases, and transparent guest communication helps mitigate disruption and negative reviews.

Budget Planning Tips

• Phase 1 budget with 15% contingency (highest risk of surprises)
• Adjust later phases based on actual Phase 1 costs
• Include guest experience costs (signage, barriers, amenities)
• Factor in dynamic pricing opportunities for renovated rooms

For detailed budgeting strategies, see our article on Top 5 Renovation Mistakes.

Overcoming Common Challenges

Noise & Disruption: Strict quiet hours, start with demolition during lowest occupancy, use quieter tools when guests are present.

Contractor Coordination: Choose contractors experienced in occupied hotels, build transition periods into timeline, daily coordination meetings.

Maintaining Cleanliness: Professional cleaning daily, sealed construction zones, regular deep cleaning of adjacent areas.

Guest Expectations: Transparent communication, proactive discounts, showcase completed phases in marketing.

When to Consider Full Closure

Phased renovations aren't always the answer. Consider full closure if:

• Structural or systems work requires it (foundation, major HVAC replacement)
• Property is very small (<20 rooms)
• Severe occupancy decline means revenue is already minimal
• Complete repositioning (changing brands, budget to upscale)
• Health/safety issues make occupied operation unsafe

Best Practices for Phased Renovations

Start planning 12-18 months ahead, test on small sections, and communicate clearly with guests and staff. Avoid skipping pilot phases or renovating during peak occupancy periods. Properly managed phased renovations can protect $450K-$550K+ in revenue over three months, maintaining market presence and financial health.

The numbers speak for themselves:

• Maintain 75-85% of normal revenue vs. 0% with closure
• Protect $450K-550K+ in a typical 3-month project
• Reduce financial risk with staged investments
• Keep staff employed and trained
• Maintain market presence and guest relationships

For most operational hotels, phased renovation is the only financially viable approach to necessary upgrades.

Ready to Plan Your Phased Renovation?

At Liberty Way Renovation, we specialize in phased hotel renovations that protect your revenue while transforming your property. We have successfully completed many occupied hotel projects across the USA.

Our phased renovation expertise includes detailed phasing strategy development, occupancy-sensitive scheduling, brand compliance coordination and ransparent budgeting and cost control.