Pricing a hotel renovation without seeing what the number does to the deal
Take a 90 key limited service hotel renovation: soft goods, casegoods, corridors, and bathroom work required by the brand standard. A contractor's number often comes in around 21k a key plus roughly 180k of public space, call it 2.1M total, and a sponsor may push back that the figure is outside underwriting and ask what can be done closer to 16k a key. Getting to a lower number usually means keeping existing tubs and reusing casegoods in a portion of the rooms, which a brand inspector may or may not accept, and that risk needs to be named explicitly rather than absorbed silently. On the investing side, when a sponsor says a number is what underwriting supports, that figure is typically tied to a fixed renovation budget line in the pro forma that flows into projected returns, not an arbitrary ceiling. The per key figure usually feeds directly into that budget line. Who eats a brand rejection of reused fixtures down the road depends entirely on how the contract allocates that risk, so getting that allocation in writing before starting is the part worth insisting on rather than negotiating price alone.
