Four Highlights From ISHC’s 2018 Study of Capital Expenditures in the Hotel Industry


The International Society of Hospitality Consultants (ISHC) in partnership with the Hospitality Asset Managers Association (HAMA) has released the fifth edition of ISHC CapEx 2018: A Study of Capital Expenditures in the Hotel Industry. In collaboration with STR, the organizations compiled and analyzed data, presenting capital expenditures trends on hotel segments including full service, select service, and extended stay.

The study’s research contains data from 902 hotels across the United States representing 64 brands and various independent properties. The hotels included in the study are owned and managed by experienced hotel professionals.

The capital expenditures and repairs as well as maintenance data collected covers the years 2013-2017. The CapEx 2018 study is following the last report in 2014 that collected data from 2007-2012 (the Great Recession), and takes a fresh look at data in its historical context.

The data was collected and categorized by property type: full service, select service, and extended stay. STR classifies full-service as luxury, upper-upscale, and upscale hotels that offer a wide variety of amenities and services. Select-service are described as upper midscale, midscale, and economy hotels that offer some of the same amenities as full-service. And extended-stay hotels are defined as brands targeting long-term guests. Participating hotels were categorized as 459 full-service, 127 select-service, and 316 extended-stay hotels located in 139 U.S. markets. The majority represent brands in suburban areas, but urban, resort, airport, interstate, and small city hotels are also included.


The CapEx 2018 study had four major findings. Hotels that participate in the study generally peak between 16 to 25 years when major buildings and systems need to be replaced, repaired, or updated. During that time period, capital expenditures and total revenue is at its highest.

Although ADR may be similar for full-service and select-service hotels, full-service hotels have greater capital expenditures than select-service. The study cites that for hotels with ADR less than $125, full-service hotels spent 2 percentage points more than select-service. And for hotels with ADR between $125-$200, full-service hotels spent 4.1 percentage points more.

Additionally, comparing capital expenditures by location, airport properties spent more than all other sub-markets. Airport hotels spent 10.4 percent of total revenue on capital expenditures, and the lowest spending sub-market was urban hotels at 6.4 percent. This trend also continues with hotel types—full-service airport hotels spent 10.5 percent compared to urban hotels at 6.5 percent, and select-service airport hotels spent 8.3 percent compared to urban hotels at 3.8 percent.

Lastly, ownership profiling mattered for capital expenditures. In the CapEx 2014 study, REITs outspent non-REIT hotel owners, and it was expected that non-REIT owners would have to catch up. This, however, was not the case. In the CapEx 2018 study, REITs outspent non-REIT hotel owners in all years except 2017. REIT average annual spend as a percentage of total revenue ranged from 5.6 percent in 2017 to 8.7 percent in 2015. The percentage for non-REIT hotel owners ranged from 5.5 percent in 2013 to 8.0 percent in 2015 and 2017. However, percentages changed by hotel type. REITs spent the most of capital expenditures for full- and select-service hotels in 2015, and non-REIT hotel owners had higher spending for full-service hotels in 2017 and for select-service hotels in 2016, respectively.

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Robin McLaughlin is digital editor of LODGING.