How do you model the impact of a PIP on Hotel Occupancy/ADR?
Hi all - I am new to CRE and am curious as to how Hotel-focused teams model/forecast Occupancy and ADR during and after a PIP. Additionally, how would one estimate the cost of a PIP? I've seen online that 7-8% of revenues is a reasonable amount, but this seems low. However, I am also new to this space.

Any insight on this or good resources to learn more about this?T

Many thanks for your help and thoughts on this!
[{"id": "ithgk9z", "text": "Its incredibly complex and pip is by brand cost varys wildly usually occupancy should go down while adr goes up because rooms being renovated cant be occupied", "replies": [], "depth": 1}, {"id": "ithhux4", "text": "After the PIP you would expect performance to improve.  You would really need to know the market and the new supply coming online to make the best assumptions.  Do you have the STR reports for the hotel?", "replies": [{"id": "itim5d9", "text": "Yes I do. Two new properties coming online 3-4 years out. The hotel is also the only Marriott-flagged hotel within 50 miles.", "replies": [], "depth": 2}], "depth": 1}, {"id": "itho3tv", "text": "It\u2019s an art form refined over decades of experience", "replies": [], "depth": 1}, {"id": "itinu6b", "text": "10 year increments", "replies": [], "depth": 1}, {"id": "itk9pwp", "text": "As others have said, there is no benchmark or \"standard\" for modeling this and it is very much subject and location-specific. Some things to consider are below, but this takes years of experience and significant understanding of the immediate market area and comp set, as well as macro factors to decipher. \n\nOccupancy: How many keys is the hotel? How significant of PIP is planned? Can they do renovations by floor? If so, how many keys will be down at a time, and how long will the PIP take? When will PIP take place and how is subject occupancy during this time?\n\nADR: Based upon PIP will this impact guest experience a la hammering/construction/dust? Where is the subject at in terms of ADR as compared to the competitive set? You mention this is the only Marriott within 50 miles, so if they lead the market how much more can they push rate without sacrificing Occ? You can't have both...\n\nYou also mention new product entering the market. This is a totally different scenario and will also impact long term \"stabilized\" ADR/Occ. Stabilized is in quotes because there is really no such thing with hospitality.  Additional supply will have an impact on both metrics on top of the planned PIP. Could be a wash and just necessary to stay competitive, could still see both deteriorate depending on the competitiveness of the new supply. Are there demand drivers sufficient to sustain occupancy for new supply if the subject is the only Marriott in 50 miles? Any pent up-demand?\n\nTLDR: Don't trust industry benchmarks for hospitality. Trust a full penetration analysis and an in-depth understanding of demand drivers, competitive set and new supply. Cost doesn't always equal value.", "replies": [], "depth": 1}]