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HOTEL TRENDS: KEEP THE LIGHTS ON DURING RENOVATIONS

Although hotels occasionally decide to close during an extensive renovation, many hotels are renovated without closing a single day. In the 1990s, the Peninsula Hotel closed entirely until renovation was complete. However, guests continued to be served throughout the extensive renovations of the New York Palace and the New York Hilton.

Renovating while remaining open requires careful isolation of the work areas and their HVAC systems. While aesthetics are often neglected, the phased renovation of the New York Palace featured the construction of a magnificent temporary lobby that was demolished once the new lobby was complete. The guests were barely able to tell that a renovation was taking place.

Avoid Costly Mistakes

Although seamless operations cannot always be assured, costly and dangerous mistakes can be avoided by focusing up front on the following issues and taking care during the design and construction process:

• Make a thorough, accurate physical assessment of the area to be renovated - especially in an older facility where crumbling masonry or plaster or corroded piping can turn a routine renovation into a nightmare.
• Conduct a well thought-out environmental assessment - failure to account for asbestos, lead paint, or conditions leading to mold contamination or legionella can cause delays and complicate renovation.
• Require the architect to provide a 100% complete design prior to bidding the work.
• Schedule and sequence the work with a focus on avoiding dust contamination, security risks and accidents.
• Enter well tailored construction and design contracts, which clearly define scopes of work, coordination and methods of dispute resolution.
• Develop a streamlined method of communication and prompt, well reasoned decision-making among the key players - hotelier, architect and contractor - to avoid cost overruns and delays.

The 10 Most Deadly Construction Sins

Our firm is often introduced to a client after a construction or renovation project is already off track and headed to court. In the resulting litigation, we find recurring themes, or "construction sins," that could have been avoided from the beginning. The 10 Most Deadly Construction Sins become even more significant in renovations that take place while a hotel is in full operation. The most significant sin is ignoring the need to truly understand local conditions. Many non-New York hospitality companies fail when they attempt to develop in Manhattan because they do not understand the impact of unions, local government requirements and bidding conditions.

Local conditions were a central focus at my recent meeting in Las Vegas with the Clark County Department of Buildings, which is prompt and hands-on in inspecting. In Las Vegas, delays in completing a hotel or casino are not tolerated by the government or by the hotel/casino owners. For each day the project is late, contractors face incredible liquidated damages in amounts commensurate with the staggering daily losses experienced by hotel and casino operators. Clark County's incentive to move things along is clear: the local government benefits greatly in tax revenues when additional rooms or casino facilities come online. In Las Vegas, as nowhere else, the hospitality industry is paramount. Specific incentives for the government to be prompt and flexible are less clear elsewhere. Accordingly, before embarking upon a renovation while staying open, it is imperative to evaluate the risk that local authorities will shut down the project, or even the whole hotel, because of a perceived code violation. Truly knowing local conditions is a prerequisite to renovating or adding to an existing hotel while guests remain.

The most commonly breached of The 10 Deadly Construction Sins during renovations to operating hotels are not assembling the right project team - architect, contractor, construction manager; not focusing up front; not coordinating the project team; not scheduling accurately and updating often enough; not meeting periodically and keeping minutes; and not having a vision for dispute resolution. Effective mediation leading to prompt resolution brings powerful results.

Fast-Tracking Dispute Resolution

Failure to make prompt decisions during a hotel renovation can cost hundreds of thousands of dollars. Architects and contractors who serve the hospitality industry understand the importance of focusing and making decisions "on the spot." The design and construction contracts must have a clause calling for prompt mediation of disputes. Contractors and design professionals who await decisions affecting significant payment issues lose momentum and suffer poor morale, which are factors detrimental to getting the project delivered on time.

A Daily Challenge

Remember, the theme is the same whether renovating a hotel or operating one: responsive, efficient and user-friendly. Keeping the lights on during renovation is a daily challenge which requires a committed renovation team that is well informed, consistently involved and focused on schedule, budget and serving the guest.

John E. Osborn P.C. is a Manhattan-based law firm concentrating in construction contract law and litigation and environmental law. The firm represents primarily large property owners including hotels, colleges and universities, health care institutions and school districts. For more information about hotel legal issues and The 10 Most Deadly Construction Sins, visit the firm's website at www.osbornlaw.com.