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A Property Improvement Plan is the first real price of a brand. Owners who treat the PIP as a punch list after the flag is chosen give away the two things that matter: what must be spent, and when the hotel can earn it back.
The PIP exists so a guest who books a known name gets a consistent product. That is a legitimate brand interest. It is also an owner capital event. The work can be triggered by a new franchise, a conversion, a change of ownership, a renewal, or a quality inspection. Industry practitioners describe a common cycle of a softer refresh around year six, a harder renovation around year twelve, and a deeper redo later in the life of the flag. See GLR on what a hotel PIP is and Axis Hospitality on when PIPs are triggered.
The decision is not “do we renovate.” The decision is whether this brand, this scope, this calendar, and this capital stack create a better future for the hotel than the next credible path.
What a PIP actually is
A hotel PIP is the brand’s written list of physical and brand-standard work the owner must complete to open, stay, or convert under the flag. It can cover guest rooms and corridors, lobby and F&B, lighting and landscape, fitness and pool, life safety, ADA or local equivalent access, and back-of-house systems. Mechanical, electrical, plumbing, and HVAC items often sit next to design items. Owners who only price FF&E miss the cost that delays opening.
A PIP is not a construction bid. It is a compliance document. Until an owner prices it with a hospitality contractor and a designer who know that brand’s current book, the number in the letter of intent is a guess.
GLR notes that owners often plan on the order of 8% of revenues over a ten-year period for PIP-type capital, and that owners should ask whether local cash flow can fund the work. That is a planning ratio, not a quote. Your market, age of building, and conversion gap will move the number.
The four moments a PIP shows up
Owners meet a PIP in four different conversations. Mixing them up produces the wrong ask.
- Conversion or first flag. The hotel is joining a system. Scope is usually the widest. Timing is tied to opening under the new name.
- Change of ownership. The buyer inherits or renegotiates the existing brand’s remaining work. A recent renovation can shrink the list. An overdue cycle can expand it.
- Renewal or extension. The brand updates standards. The owner is deciding whether the remaining years of the flag are worth the next cycle of capital.
- Quality or brand inspection. Work is framed as cure. Leverage is lower because the hotel is already inside the system.
A conversion PIP should be compared to at least one other brand’s conversion PIP and to the independent path. A renewal PIP should be compared to a reflag. Same document type. Different decision.
The SCOPE-TIME-CASH matrix
Use this matrix before anyone drafts a franchise or management paper. Score each competing path on the same three axes. Do not let a prettier lobby finish hide a worse cash calendar.
Axis | What you write down | Owner question
SCOPE | Line items that change guest product vs. line items that only change brand identity vs. life-safety / code | Which items raise rate or occupancy in this market, and which only satisfy a standard book?
TIME | Must-complete-before-flag vs. phased years 1-3 vs. next cycle | How many nights of displacement, and when does the hotel return to a full rate?
CASH | Owner equity, lender holdback, brand contribution, key money, FF&E reserve | Who funds which line, and what happens if bids come in high?
A path that looks cheaper on royalty points can lose on TIME if the hotel must close floors for nine months. A path that looks expensive on SCOPE can win if the brand funds a share of the guest-facing work and the calendar protects peak season.
Disciplined owners put two or three brand or operator paths on the same matrix before they pick a counterpart. That is the job a structured process is built for. Dealality exists so an owner can see those paths side by side, privately, before a first conversation locks the hotel into one version of the future.
Negotiating levers that actually move money
Brands write PIPs to protect the guest promise. They also know that an owner who cannot fund the work will not open, or will open late. The conversation is commercial. These are the levers owners use when they still have a choice.
1. Split identity work from product work
Ask the brand to mark every line as guest-product, brand-identity, or code/life-safety. Identity items (signage packages, specific casegoods, a mandated coffee program) are the first place to seek alternates, owner-supplied equivalents, or a later phase. Product items that raise ADR in your comp set deserve capital first.
2. Phase against seasonality, not against the brand calendar
A 24-month conversion window that ignores your high season is a tax. Negotiate a written phase plan: public areas first or rooms first, floor-by-floor displacement limits, and a right to extend for force majeure and permit delay. In resort markets, losing the peak months can cost more than the FF&E itself.
3. Cap, reopen, and value-engineer
Attach a cost estimate, not only a spec. Agree that if competitive bids exceed the estimate by a defined band, the parties reopen scope before the owner is in default. Value-engineering is normal. A hospitality architect who has built that brand before will know which “required” finishes have accepted alternates.
4. Tie brand money to the same lines
Key money, development incentives, and design credits should map to named PIP lines, not sit as a vague offset. If the brand wants a more expensive bathroom package, ask that incentive to follow that package. Read this next to how owners negotiate key money.
5. Protect the next cycle in the first contract
The first PIP is not the last. Ask how the brand treats the next soft and hard cycle: notice period, owner right to estimate, and whether a mid-term standard change can pull work forward. An owner who only negotiates year-one capital is financing a surprise in year six.
6. Align the operator with the same scope
If a third-party operator will run the hotel, the PIP and the management agreement must describe the same work, the same owner-approval rights, and the same disruption plan. Otherwise the operator spends against a brand list the owner never priced. See HMA terms owners should push for.
Brands benefit when the owner can actually deliver the product. A clear PIP, funded on time, is better deal flow for Marriott, Hilton, IHG, Hyatt, Wyndham, Choice Hotels, and independent operators than a signed flag that stalls in construction. The owner’s discipline helps both sides.
What to ask brands and operators before anyone drafts paper
Use this checklist in writing. Verbal comfort is not a PIP.
- What triggered this PIP: conversion, ownership change, renewal, or inspection?
- Which lines are guest-product, which are brand-identity, which are code?
- What is the current brand standard book date, and which items are already scheduled to change?
- May we submit owner-equivalent FF&E and FF&E vendors?
- What must be complete before we may use the name, and what may phase after opening?
- What is the displacement plan, and who pays for lost occupancy if the brand adds scope mid-job?
- Who inspects completion, how many punch visits, and what is the cure period?
- If bids exceed the attached estimate by X%, do we reopen scope before default?
- Which incentive dollars attach to which lines, and when are they paid?
- How does this PIP sit next to the next six- and twelve-year cycle?
- For operators: who procures, who approves change orders, and what owner consent is required above a dollar threshold?
- For lenders: what holdback, what completion test, and what happens if the flag is delayed?
Owners who run this list with more than one brand learn something a single conversation cannot teach: which counterpart is flexible on TIME, which is flexible on SCOPE, and which is only flexible on a press release.
How a PIP changes the brand vs. independent decision
A PIP can make a flag the highest-value path. It can also make independence, a soft brand, or a later conversion the better path for this asset. The test is not loyalty to a name. The test is whether the capital, the disruption, and the remaining contract term produce a better hotel than the alternatives.
Compare the PIP path to:
- Staying independent and funding only the work that your guests and your lender already require. See branding vs. staying independent.
- A soft brand vs. hard brand conversion, which often changes how much identity work the owner must buy.
- A later reflag, if the current building cannot absorb a full conversion without a closedown you cannot fund. See reflagging and conversion planning.
Dealality is built for that comparison. The scarce work is not collecting brochures. It is putting real counterparties, real scopes, and real calendars in one confidential process so the owner can choose the best path before they commit.
A short owner sequence
- Write the hotel’s next 24 months: occupancy seasonality, lender covenants, and cash available for capital.
- Request PIPs from more than one credible brand or confirm the independent scope with your operator and contractor.
- Price all lists with the same estimator. Do not compare a brand letter to a napkin bid.
- Fill the SCOPE-TIME-CASH matrix. Kill any path that fails cash or seasonality, even if the flag is attractive.
- Negotiate phase, equivalents, incentive mapping, and reopen rights. Then, and only then, negotiate royalty and term.
- Record why you chose the path. The next buyer and the next lender will ask.
If you remember only the sequence: price the PIP before you fall in love with the flag.
Close
Hotel owners do not lose value because they renovated. They lose value when they buy one brand’s version of the future without seeing the others. A PIP is where that version becomes concrete: rooms, months, and cash.
If you are approaching a conversion, a renewal, or a change of ownership, run a private process that lets brands and operators respond to the same hotel, the same constraints, and the same questions. Start at dealality.com.
Marriott, Hilton, IHG, Hyatt, Wyndham, and Choice Hotels are independent companies and registered trademarks of their respective owners. Dealality is not affiliated with, endorsed by, or sponsored by any of these companies. Brand names appear for nominative, factual reference only.
Joan Dejarden is the founder of Dealality and a hospitality strategist with experience across Marriott International, hotel ownership, development and advisory work in the Americas and Europe. His current work focuses on hotel decision intelligence, brand and operator strategy, and how artificial intelligence is changing hotel discovery, demand and deal-making.