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Hotel Remodels: A Hotel Case Study

The Company

An international hotel franchisor overseeing thousands of locations

The Challenge

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.

The Solution

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.

The Results

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.
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