Hotel Strategy - Renovation & Repositioning
Comprehensive Renovation of Our Portfolio of Hotels
We have implemented a long-term capital plan for each hotel to enhance each hotel’s competitive position. We are spending approximately $450 million in capital to renovate our portfolio, which represents almost $20,000 per room. The program will touch all areas of a hotel, including guest rooms, guest baths, public areas, meeting space, exterior, roofing, major mechanical and other back of the house areas. We expect this to be completed by the end of 2008. Approximately three quarters of the total capital will have a positive impact on the guest experience and we expect to earn a 12% return on average, on that portion of the capital.
After the completion of the plan, FelCor will have a renovated portfolio. Improving the quality of the assets is not only imperative from a long-term shareholder perspective, but we are able to earn returns above our weight average cost of capital.
Redevelopment Opportunities
We have identified many opportunities to add significant value through the maximization of our real estate. These projects include adding meeting space, guest rooms and/or spas. We also will continue to utilize our excess land at beach-front properties for condominium development. We plan to use proceeds from selling non-strategic hotels to fund some of the redevelopment projects and we expect average returns to be approximately 18%. The projects will be commencing over the next three years. We are also evaluating additional value added enhancements in existing space, such as new restaurant concepts.
We have four projects underway or completed; adding meeting space in Dana Point, building a new convention center in Myrtle Beach adjacent to our Hilton, adding a spa and fitness facility in Deerfield Beach and redeveloping our hotel in Union Square.
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Doubletree Guest Suites - Dana PointIn 2008, FelCor will complete the addition of 7,800 gross square feet of meeting space. |
San Francisco Union SquareIn 2008, FelCor will redevelop and rebrand this hotel to a Marriott. |
