Hotel brand audits › Property Improvement Plan
Hotel Operations · Franchise & CapitalWhat is a hotel PIP (Property Improvement Plan)?
Ask a hotel owner what keeps them up at night and three letters come up fast: PIP. It is the brand's renovation mandate, and almost every franchised hotel meets one eventually. Here is what it is, what sets it off, and what it costs.
A hotel PIP, or Property Improvement Plan, is a renovation and upgrade plan a franchise brand requires to bring a property up to its current brand standards. The brand inspects the hotel, issues a detailed list of mandatory improvements across guest rooms, public spaces, the exterior, and building systems, and sets a deadline to complete them at the owner's expense. A PIP is most often triggered by a change of ownership, a franchise renewal, a brand conversion, or a property falling short of brand standards.
What sets off a PIP
A PIP rarely appears out of nowhere. It is almost always attached to a moment when the franchise relationship is being created, renewed, or tested. These are the four classic triggers.
Change of ownership
When a hotel is sold, the buyer almost always receives a PIP as a condition of transferring the franchise. The most predictable trigger, and often the most aggressive in scope.
Franchise renewal
Relicensing for another term usually comes with a PIP to refresh the property to the brand's current look and systems before the new agreement starts.
Brand conversion
Switching flags, from one brand to another, means rebuilding the property to the new brand's standards, typically the largest PIP of all.
Falling short of standards
Persistent failures on brand standards audits or guest-satisfaction scores can prompt a PIP to force the property back to standard.
On top of these, brands roll out PIPs as their standards are refreshed. According to Lodging magazine, a PIP was historically issued about every ten years, but that cycle has been getting shorter, with brands now issuing them on roughly seven-year intervals or less.
What a PIP costs
There is no single price, because scope depends on the brand, the property's age and condition, and how far standards have moved. But the rule of thumb and the direction of travel are both well documented.
Costs have also been pushed up by construction and furnishings inflation. Lodging magazine noted producer prices for furniture, fixtures, and equipment rose sharply in the early 2020s, which lands directly on PIP budgets because guest-room furnishings and finishes are usually the largest single line item.
What is usually in the plan
A PIP is organized by area, and the scope tracks wherever the brand standard has moved. Common buckets include:
PIP vs a brand standards audit
They are two halves of the same machine. A brand standards audit measures whether the hotel meets the standard today. A PIP is the renovation mandate that follows when it does not, or when ownership or the standard itself changes. The audit finds the gap; the PIP is the plan to close it. The most direct way to keep a PIP smaller and less of a surprise is to keep condition high and pass audits consistently in between. A related question, what happens if a hotel fails a brand standards audit, covers the enforcement side.
A PIP is a condition bill that comes due all at once. The properties that get the nastiest surprises are usually the ones that let small condition problems compound unseen between audits. RapidEye is AI inspection intelligence that reads the room photos a housekeeping team already captures and flags damage, wear, and missed maintenance on every room as it happens, with a human making the final call, so condition is a number you watch continuously rather than a shock you discover when the brand walks the property. See how hotels use AI in housekeeping.
Frequently asked questions
What is a hotel PIP? +
A hotel PIP, or Property Improvement Plan, is a renovation plan a franchise brand requires to bring a property up to its current brand standards. The brand inspects the hotel, issues a list of mandatory improvements across rooms, public spaces, exterior, and systems, and sets a deadline to complete them at the owner's cost. PIPs are most often issued at a change of ownership, a franchise renewal, a brand conversion, or after a property falls short of brand standards.
What triggers a hotel PIP? +
The most common triggers are a change of ownership (a PIP is required to transfer the franchise), a franchise renewal or relicensing, a brand conversion, and falling short of brand standards or guest-satisfaction thresholds. Brands also issue PIPs as their standards are refreshed, historically about every ten years, though that interval has been shortening.
How much does a hotel PIP cost? +
It varies widely by scope, brand, and condition. Historically, per Lodging magazine, hoteliers could expect to spend roughly 7.5 to 8 percent of revenue on a PIP issued about every ten years. Costs have risen with construction and furnishings inflation and PIP cycles have grown more frequent. As one example cited by Lodging, a 50-room hotel faced a 500,000 dollar PIP. Guest-room work is usually the largest line item.
What is the difference between a PIP and a brand standards audit? +
A brand standards audit measures whether a hotel currently meets the brand's standards. A PIP is the renovation mandate that follows when it does not, or when standards or ownership change. The audit identifies the gap and the PIP is the required plan to close it. Passing audits and maintaining condition is the best way to keep a PIP smaller and less of a surprise.
Sources
- Lodging magazine: PIPs in Perspective, Costlier Projects Negatively Affecting the Economy Sector. Source for the historical 7.5 to 8 percent of revenue rule of thumb, the roughly ten-year cycle shortening toward seven years or less, the change-of-ownership transfer trigger, furnishings and construction cost inflation, and the 500,000 dollar PIP example for a 50-room hotel. https://lodgingmagazine.com/pips-in-perspective-costlier-projects-negatively-affecting-economy-sector/
PIP scope and cost are set by each brand and property; figures here are illustrative, not a quote for any specific hotel.