Driving growth through accretive investments and value-enhancing return-on-investment opportunities remained top of mind for hoteliers this year and it's expected to continue into 2022.

Executives from publicly traded hotel companies and hospitality real estate investment trusts during third quarter earnings calls told analysts that renovations and other capital projects have been in full swing. Companies are also making strides toward driving multiple channels of growth through capital recycling and internal growth initiatives.

Here are some highlights from the transcripts of hotel company conference calls with industry analysts.

"Earlier this week, we completed a $15 million comprehensive guestroom renovation of our Southernmost Beach Resort in Key West. The last of our resorts will be fully renovated or redeveloped and repositioned. And we continue to make progress with our $25 million transformation of Hotel Vitality to One Hotel in San Francisco. We've experienced some delays due to the constraints of the supply chain in receiving [furniture, fixtures and equipment] items. So we now expect this renovation to be completed in the first quarter compared to last quarter's expectation at the end of 2021.

"For all of 2021, we anticipate reinvesting a total of $80 million to $90 million in the portfolio, which is in line with our prior annual estimate."

"The Mandalay Beach renovation is in full swing. For Santa Monica and Charleston, we've completed the model room design and we'll be starting these renovations shortly. We have made significant strides towards driving multiple channels of growth with our capital recycling and internal growth initiatives, further strengthening our ability to drive [earnings before interest, taxes, depreciation and amortization] growth that is above and beyond the cycle recovery. Our balance sheet continues to be a competitive advantage and allows us to execute on our internal growth catalysts and acquisition pipeline while remaining disciplined."

"In addition to our successful capital allocation efforts this year, we remain focused on our three strategic objectives. As a reminder, we are targeting a potential $240 million to $315 million of incremental [earnings before interest, taxes, depreciation and amortization] over time on a stabilized annual basis as we execute the initiatives and projects underlying our strategic objectives. This range includes hotel EBITDA of approximately $93 million from our acquisitions year to date. First, we expect to generate $100 million to $150 million of potential long-term cost savings over time based on 2019 revenues from redefining our operating model with our managers.

"We have taken steps toward 50% to 60% of these savings to date. Second, we expect to generate $21 million to $35 million of incremental EBITDA over time on a stabilized annual basis from our goal of gaining three to five points of weighted index growth at the 16 Marriott transformational capital program hotels and five other hotels, where major renovations have been recently completed or are underway. Keep in mind that our expectation of a three- to five-point gain in market share was a pre-pandemic estimate. As we have been in a unique position of deploying significantly greater capital in 2020 and 2021 than our competitors, we are optimistic that our market share gains could be greater as the property competitive set is either an inferior product due to lack of renovation or there will be meaningful business disruption as hotels are renovated.

"We expect to complete approximately 85% of the Marriott's transformational capital program by year end and substantially complete the program by the end of 2022. We expect to invest $1.2 billion in these 21 assets or approximately $73,000 per key. As of the third quarter, we have invested $834 million in renovations at these hotels, and we do not expect to spend significant capital on these assets in future years. During the third quarter, we completed renovations at the New York Marriott Marquis, which included a complete upgrade of the guestrooms, renovations of over 140,000 square feet of meeting space, the expansion of the skybridge line with two high-definition LED screens and a reimagined lobby with new bars and upgraded restaurants.

"Subsequent to quarter end, we completed transformational renovations at the Orlando World Center Marriott in Florida, which included the guest rooms and an updated lobby, restaurant and bar. These multiyear comprehensive renovations at the two largest hotels in our portfolio were part of the Marriott transformational capital program and bring the total number of completed projects in this program to 10 of 16 properties. We avoided significant business disruption by completing these projects during the pandemic. And as a result, they are very well-positioned to capture market share in the recovery.

"In addition to the Marriott transformational capital program assets, we recently completed the extensive guestroom renovations at the Hyatt Regency Coconut Point in Florida. Lastly, we expect to generate $25 million to $35 million of incremental EBITDA over time on a stabilized annual basis from recently completed and ongoing ROI development projects. These projects are at different stages of renovation and development, and stabilization is expected to occur two to three years after completion. Some recent examples of our ROI development projects include the Andaz Maui villas, which are targeting 49% occupancy with an [average daily rate] over $1,600 through 2021 versus our underwriting at 34% occupancy with an ADR of $1,400."

“We continue to make progress on deleveraging our balance sheet through asset sales; and finally, pivoting now to offense to drive earnings growth through accretive investments, including value-enhancing [return on investment] projects like our Bonnet Creek Signia conversion and meeting space expansion, while eyeing several other potential brand conversions and repositionings within the portfolio. …

“There are many options available within our portfolio for embedded [return on investment] opportunities. Obviously, the Bonnet Creek that has been reactivated, we're really excited about that — one, the name change, and two, the repositioning of that world-class resort. The DoubleTree San Jose is another great conversion opportunity for us, taking up that brand like we did with the DoubleTree in Santa Barbara, where we've got incredible results. And then, of course, the Casa Marina in Key West is another that you'll see us reposition as well, even though it's having phenomenal results at this time. …

“We've got the three ROI projects that … are probably about $200 million in capital, and we think the returns are probably 14% to 15%. And you're probably looking at EBITDA somewhere in the $30 million range. That does not include New Orleans. New Orleans is certainly more complex.

“But keep in mind, we've got the Whale Lot [between the Hilton New Orleans Riverside and the New Orleans Career Center] that we often refer to. We've got eight acres, plus or minus, and we've got 5 million square feet of additional [floor area ratio] adjacent to the convention center. That's clearly a longer-term project and one that we would look for a development partner and others as we proceed. But we see huge, huge upside.”

“Let me highlight a few of the bigger ROI projects. Our Vail resort [has completed a] $40 million repositioning. By the end of this month, the resort will be relaunched as The Hythe Vail Resort and Spa, a Luxury Collection Hotel. The repositioned resort is expected to generate several million dollars of incremental EBITDA. Our Barbary Beach Key West Resort will also complete its conversion in November. It will be relaunched as the only Margaritaville Resort in the Florida Keys. We expect the repositioning to allow us to push average rate by $15 and to generate several million dollars of incremental retail and bar sales.

“The last ROI project I'll highlight is in Denver, where we are underway with the upbranding of the JW Marriott to a Luxury Collection Hotel to be named The Clio. This one should be completed in the first quarter of 2022. These ROI repositionings are expected to deliver [internal rate of returns] north of 30%. As you might have guessed, we are big believers in these type of projects, and our past success gives us great confidence.”

"As we think about CapEx, consistent reinvestment in our hotels has always been a key element of our strategy. During the first nine months of 2021, we invested approximately $10 million in capital expenditures, and we anticipate investing an additional $15 million to $20 million in capital improvements during the remainder of 2021, which includes scheduled renovation projects for eight hotels and a variety of capital projects. We will continue to focus our investments on elements likely to have the greatest guest impact at assets where we feel we will achieve the best return on our investment over the long term and to strategically schedule major projects in order to minimize property level disruption."

"In the third quarter, we spent $7.3 million [on capital projects]. We continue to estimate spending approximately $40 million on capital expenditures for the full year. The restaurant lobby renovation at the Ritz-Carlton, Pentagon City was completed in October.

“This restaurant has been well-received, and we are pleased with how the look and feel of the restaurant and lobby integrates with the meeting space we renovated last year. We believe these improvements will position the hotel for continued success. The development of the Regency Court, a new outdoor social venue at our Hyatt Regency Scottsdale Resort & Spa, was delayed primarily due to weather-related issues. It is expected to be completed in mid-November.

“This significant increase in the hotel outdoor meeting space is already generating considerable interest for incremental social and corporate events. The restaurant, lobby and guest room renovations of Waldorf Astoria Atlanta Buckhead are nearly underway and are expected to be completed in the first quarter of 2022. We believe this comprehensive renovation will secure the property's position as a preeminent luxury hotel in the Buckhead market. Last quarter, we announced the plans for comprehensive renovations of Grand Bohemian Hotel Orlando and the Kimpton Canary Hotel Santa Barbara, both of which will encompass renovations of each hotel's guest rooms, restaurant and bar, lobby, rooftop pool area and meeting space.

“We are pleased with the early design efforts for these projects, which will create a lighter and more contemporary look and feel for each property. Work on these two projects is expected to begin in the first quarter of 2022, with estimated completion dates in the first quarter of 2023. These projects are being completed in phases to minimize guest experience disruption and financial impact.”

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