How to Use Reputation Management to Influence Hotel CapEx

Introduction to Hotel CapEx


Hotels have a lot of options when it comes to allocating capital expenditure, or CapEx, budgets each year. Without proper data and research, it’s nearly impossible to choose the most impactful improvements that will maximize return on investment. Hotels that take the time to analyze their existing data, i.e. guest reviews, have the the opportunity to choose the best projects. Here’s how you can use reputation management to allocate your hotel’s CapEx.


What is a capital expenditure?


A capital expenditure is either a newly purchased asset or an investment in a current capital expenditure that extends the life of the asset, according to Investopedia. For example, a new capital asset would be a new table and chairs, where as an improvement would be reupholstering or refinishing the table and chairs.

A capital expenditure has a specific meaning because of its tax implications. If something is categorized as CapEx, it is usually depreciated over a certain number of years. There is a difference between a CapEx and operating expenses. Operating expenses are necessary to continue running your business, where as CapEx has a broader impact. Therefore, eliminating the guesswork behind allocating hotel CapEx dollars is especially important.


How your hotel can identify where to spend your CapEx


Capital expenditures usually require research and planning due to the size of their budgets and project scales. Hotel CapEx must have a tangible impact on your property and are usually thought of as cash generating expenses. Thankfully, the research most hotels need is already available.

As a hotel owner or operator, you understand the usefulness of user-generated reviews. Usually when we discuss reputation management, we focus on the short-term aspects of the reviews, for example, the staff’s friendliness, the cleanliness of the room, etc. But, what we’re also able to track with reviews is how larger issues, that are often harder to change, affect a guest’s stay.

If you analyze your guests’ reviews over a longer period of time, you’re able to discover problems that will eventually require your attention. Maybe your rooms are starting to show their age or your pool deck could use a revamp. Every property’s projects vary based on type, size, and customer demographic. We suggest performing a sentiment analysis against your reviews on a regular basis. If that sounds difficult, don’t worry. There are already solutions that will do this for you. For example, with TrustYou’s advanced sentiment analysis, you’ll be able to identify what’s most important to your guests and where they’ll notice changes, in an instant. After you identify the aspects your guests do and don’t enjoy, you’ll be able to pinpoint what needs to be addressed.

Hotel CapEx projects end up impacting a property for years. Guests are usually upfront in their reviews about the status of everything from your rooms to the bathrooms to your lobby. Using reputation management software, you’ll be able to identify what your guests talk about the most.  

Changing trends will also influence how your hotel should allocate your capital expenditures. Of course certain expenses, like guest room improvements, will always be important. But, the way guests use other areas of your property may change over time. For example, large, open lobbies and public areas are in high demand right now. Travelers want a place to mingle with other travelers or hang out with their friends. Technology has also become an important factor that many hotels may want to address. Tracking trends and aligning them with your current guest feedback will help you identify the most impactful projects.

There are hundreds of different options when it comes to updating your property. Use your reviews to identify what’s most important to your past, present, and future guests. Keeping an eye on your reviews will eliminate the guesswork involved in budgeting your hotel CapEx and help you build a hotel product you know guests will love.

Guest satisfaction can and should be the ultimate ROI on any improvement you make at your property, but it’s especially important when making long-term decisions.


Measure the results


After you identify and complete the investments to your property, continue to monitor guest satisfaction and listen to what they’re saying. If you make the correct decisions, your market will react positively and vice versa. If people continue to complain about the same aspects of your property, then you may have allocated your budgets ineffectively. But, with a proactive approach using your guest satisfaction as the ultimate ROI, you can make sure that doesn’t happen.