Hotel Franchise PIP Cost Calculator

Brand-required PIP capex is a major hotel acquisition and refinance underwriting input.

Number of keys

Guest room PIP / key

Public/corridor PIP / key

Systems PIP / key

F&B/amenity total PIP

Soft cost %

Total PIP

$5,992,000

PIP / key

$39,947

Hard cost subtotal

$5,350,000

How the math works

Hard cost = keys × (rooms + public + systems) + F&B. Total = hard × (1 + soft %).

150 × ($22k + $5k + $6k) + $400k = $5.35M. × 1.12 = $5.99M total = $39.9k/key.

How to Use

Enter number of keys.
Enter guest room PIP per key.
Enter corridor/public PIP per key.
Enter building system PIP per key.
Enter F&B/amenity PIP.
Enter soft cost %.
Read total PIP and per-key cost.

Frequently Asked Questions

What is a PIP?

Property Improvement Plan: brand's list of required renovations to bring hotel into current brand standards. Triggered at: (1) franchise license renewal (typically every 15-20 years), (2) ownership transfer, (3) brand conversion. Brand issues PIP after inspection, 60-180 days before trigger. Owner must execute within 1-3 years of signing. Non-compliance = brand termination.

PIP components?

Guest rooms: case goods, soft goods, bathroom vanity/fixtures, TVs, wall coverings — $15-40k/key. Corridors/public space: carpet, wallpaper, lighting, lobby reimaging — $2-8k/key. Building systems: elevators, HVAC, roof if dated — $3-12k/key. F&B: restaurant refresh, fitness center equipment — $1-5k/key. Exterior: signage, porte-cochere — $500-2k/key. Total: $25-75k/key typical for full PIP.

PIP timing and funding?

Tier 1 (immediate, 6-12 mo): safety, signage, brand-critical. Tier 2 (12-24 mo): guest rooms, public space. Tier 3 (24-36 mo): systems, full refresh. Funding: reserve account (4-5% of revenue held in escrow, refundable against PIP), cash from ops, PIP loan (specialty lender), mezz capital, conversion incentives (brand may fund 10-40% for conversions from competitor).

PIP impact on underwriting?

Acquisition: PIP reduces purchase price dollar-for-dollar (more or less). Refinance: PIP funded separately or baked into loan request. Seller-funded PIP or credit negotiations common. Lender reserves: PIP amount held in escrow, released as completed. Deferred PIP risk: brand termination destroys value (brand flag = 20-40% of revenue for major brands). Discount existing stabilized NOI by PIP drag 2-4 years.