The Value Add
Kevin Filer, SVP Design & Construction, Davidson Hospitality Group
March 5, 2021
One of Davidson Hospitality’s core values is to “create value in all you do.” Davidson’s Design and Construction (D&C) team takes this value to heart. Our D&C team members are focused on not only the opportunity to increase operational efficiencies during the design and specification of the project, we actively pursue “return-on-investment” projects. These ROI projects typically have a simple payback of less-than five-years. The returns can be achieved through initiatives that implement a revenue generating feature for the hotel/restaurant or reduces operating cost of a hotel/restaurant.
Davidson’s D&C team believes in partnering with owners and developers during all phases of a renovation project. This includes more than just the typical construction management process, and truly partnering to make the hotel/restaurant: 1. More efficient to operate, 2. Create more revenue and 3. Reduce operating utility cost.
Typically, Davidson’s D&C team is engaged early in the project before the design team is chosen. Davidson’s experienced construction team coordinates an early review of the hotel’s needs with experts from Davidson’s operations, Davidson’s Restaurant Group, Strategic Development team and our Business Development teams to brainstorm all project-based revenue opportunities as well as any cost savings strategies. The goal is to incorporate the value-add project findings into the final development scope to insure the renovation project has the greatest opportunity to impact the performance of the hotel at completion of the renovation. With over 40 years of successful development projects under Davidson’s belt, our D&C team insures the most qualified design team is selected that understands the new vision for the project and can perform to our quality and design standards. We’ve earned a reputation for not only delivering projects on-time and on-budget, but for also delivering projects that perform!
Davidson Hospitality’s expertise in managing independent and lifestyle hotels has afforded our D&C team project management opportunities that have significantly increased the value of the newly renovated hotels. One example of a current project where the Davidson’s value-add initiative is projecting to add significant value to the asset is Grand Hotel on Mackinac Island, MI. Ownership teamed with our D&C team to manage all renovations to this iconic hotel. Davidson’s D&C team implemented the value-add process and together with owners and our internal operating teams had identified multiple revenue generating opportunities as well as operating cost reduction opportunities.
There are many challenges with working on Mackinac Island besides the obvious logistical issues of working on an island that is difficult to get to and that doesn’t normally allow motorized vehicles. The construction schedule is limited to the months of November through April when the Hotel is closed for the winter season. We assumed management in October 2019 and had limited time to implement changes to the hotel. However, first and foremost we spent the winter trying to improve conditions for the employees and doing some small value-add projects. Further, we prioritized construction needs to the projects that would add the most value to the guests and have an impactful lift to the hotel’s operations. The team identified the opportunity to significantly upgrade the pool experience and include the addition of meeting space, cabanas, and new food & beverage outlet at this location with the best views of the Straits of Mackinac. The team also focused on improving the guest bathrooms in the hotel, which had not been renovated in over 20 years, including new shower conversions in many of the rooms. All of the bathrooms in the hotel are currently being renovated this winter and will be ready for the hotel’s opening in May 2021. In addition, the D&C team partnered with a retail consultant to help upgrade the retail experience and identify better ways to generate revenue from previously under-utilized spaces. These current initiatives will substantially improve the guest experience as well as provide the opportunity for increased revenue.
All projects can benefit from sustainable or “green” opportunities. The team focused on ways to reduce energy and water consumption and all of the newly renovated guest bathrooms will include low flow water fixtures. Other energy conservation measures implemented were energy saving thermostats installed in guestrooms and employee housing units, LED lighting audits completed and LED fixtures installed, and water-reducing filtration systems in the new pool that will significantly reduce the amount of water usage compared to the older system. Additional operational efficiencies included the re-design and upgrade of the laundry facility which is being completed this winter and will reduce labor costs, improve employee working conditions, as well as reduce energy and water consumption.
New development on the island is limited each year and controlled by development credits. By strategically developing the upgrades to the pool area, the team realized extra development credits that will be strategically utilized to potentially develop the previously underutilized lakefront property in the future. In addition, multiple other initiatives are currently being analyzed by the team to insure the best experience for our guests while improving the performance of this iconic hotel for the owners.
More than just delivering in a timely and cost-effective manner, we specialize in creative design and quality construction that delivers the “value-add” to our owners and development partners assets.