An international hotel franchisor overseeing thousands of locations
One of the franchisor’s core brands was underperforming. Management thought that updating the hotel brand with remodels of each of its hotels’ lobbies, guest rooms, and exterior signage would lead to improvement. They designed a refurbishment program and tracked its performance with a set of pilot remodels, which cost hundreds of thousands of dollars per hotel. In spite of an attempt to evaluate the remodels, they were unable to isolate their incremental impact on RevPAR and guest satisfaction. The client was also unsure whether incremental guests were simply drawing business away from the franchisor's other brands.
APT’s Test & Learn™ software enabled the client to identify the investment’s precise impact on each hotel. They learned that the remodel caused a clear incremental lift to both RevPAR and guest satisfaction. In addition, APT confirmed that incremental guests were drawn from competitors, rather than simply cannibalizing guests from nearby brands within the hotel group. Finally, Test & Learn™ helped the franchisor target the guests and hotels that would respond most profitably to the remodel.
By demonstrating the significant returns that resulted from the pilot remodels, management drew additional franchisees to the remodel program. Ultimately, the APT-tailored remodel program drove an increase in net present value of $100MM for participating franchisees.
An international hotel franchisor and operator sought to enhance the aging properties of a core brand through a large-scale reinvention.
The company used APT's scientific approach to optimize an extensive refurbishment program.
APT's scientific approach minimized measurement error, detected a clear lift in RevPAR, and generated organization-wide consensus that the renovations delivered an attractive ROI.
Continued implementation of the remodels created approximately $100MM in net present value for hotel owners.
An international hotel franchisor with thousands of hotels
Management believed that a core brand underperformed, in part because of its outdated brand offerings. The hotel chain designed a hotel refurbishment program and began investing hundreds of thousands of dollars per hotel to update lobbies, guest rooms, and exterior signage. The brand’s management carefully tracked the performance of the initial set of “pilot” hotels but was unable to detect a clear impact on key performance metrics. Measured changes in RevPAR, occupancy, and customer satisfaction varied widely, even erratically, across the refurbished hotels. Management halted the remodel investment and reconsidered various options to address the brand’s underperformance.
The company used APT's Test & Learn™ solution to evaluate the precise impact of the capital investment on each hotel. Given the small number of hotels in the “pilot” program, it was critical to take an analytical approach that minimized the measurement error inherent in analyzing week-to-week changes in performance.
APT’s refined measurements clearly identified incremental RevPAR and improvement in guest satisfaction. The confirmed increase in RevPAR made the capital investment attractive to hotel franchisees. APT’s analysis also confirmed that the remodel activity was not cannibalizing surrounding same-brand hotels, and that the incremental business was coming from nearby competitors.
In addition, APT used guest data to identify the specific guest segments that the remodel program influenced the most. The company targeted these segments to enhance the program’s returns.
Finally, APT identified the characteristics of hotels that were particularly well positioned to benefit from the remodel and therefore likely to generate above-average returns. The company used this analysis to determine which hotels should be prioritized for an earlier remodel, allowing all stakeholders to capture larger profit opportunities earlier in the remodel program.
Management was able to recruit additional franchisees to participate in the remodel program by demonstrating the attractive returns that resulted from the first round of remodels. As additional remodeled hotels yielded the projected level of benefits, the company continued to aggressively remodel the remainder of the portfolio. Using Test & Learn for Sites™, management could also identify which components of the capital investment should be undertaken on a site-by-site basis.
The company ultimately determined that this highly tailored remodel initiative drove $100MM of net present value for franchisees.