Hotel PIP Guide: Scope, Phase, Price and Negotiate

What a hotel PIP is

A property improvement plan, or PIP, is the brand's written list of upgrades a hotel must complete to meet current standards. It usually comes out of a physical inspection by the franchisor and is attached to a franchise agreement, a transfer approval or a renewal. Each item typically carries a deadline, and missing those deadlines can put the property in default. For an owner, the PIP is less a punch list than a capital plan the brand has written for you, so it deserves the same scrutiny as any major investment. The size of a PIP varies widely with the age of the hotel, the brand, the last renovation cycle and how far the property has drifted from current standards.

When brands issue a PIP

Brands most often issue a PIP at a few predictable moments:

• Sale or change of ownership: the buyer usually needs a new franchise agreement or a transfer, and the brand uses that moment to bring the hotel up to current standards.
• Conversion: a hotel joining a new flag, from another brand or from independent, gets a PIP that defines what must change before it can open under that name.
• Renewal or relicensing: as a franchise term nears its end, the brand may condition a new term on a refreshed PIP.
• Ongoing standards: some brands also issue updates mid-term when standards change or when quality scores slip.

What a PIP typically includes

Every brand and every property is different, but most PIPs touch the same categories. Guestroom items often include soft goods such as bedding, drapery and carpet, plus case goods, lighting, bathrooms and in-room technology. Public areas commonly cover the lobby, breakfast area, fitness room, pool and meeting space. Exterior and building items can include signage, parking lots, facade, roofing and life safety systems, along with back-of-house and technology requirements like the property management system and Wi-Fi. Read every line, because vague wording such as "replace as needed" can mean very different costs depending on who interprets it.

Scope it before you accept it

Before you sign anything, walk the hotel with the PIP in hand and mark which items are truly required, which are already compliant and which are unclear. Get written clarification from the brand on ambiguous items, including approved product lists, whether existing finishes can be refurbished instead of replaced, and what counts as complete. Have contractors and vendors price the scope you actually expect to do, not a generic estimate. If you are buying the hotel, this work belongs in due diligence, since the PIP can change what the property is worth to you. A good scope document also becomes your baseline later, when you need to show the brand exactly what was agreed and what was finished.

Phase and price the work

Most PIPs allow some sequencing, and a smart phasing plan protects revenue while the work happens. Owners often renovate rooms in blocks during softer demand periods, schedule public area work so the lobby and breakfast stay usable, and order long lead items early so deadlines are not missed waiting on furniture. Build a budget with line items, a contingency and a clear owner for each task, then track it monthly against actual spend. Remember to count the hidden costs: displaced rooms, extra labor, temporary signage and the guest experience during construction.

Negotiating the PIP

Many owners assume a PIP is fixed, but items, standards and deadlines are often open to discussion, especially during a sale, conversion or renewal when the brand wants the deal done. Common asks include longer completion windows, phased deadlines tied to specific milestones, substitutions for items that are already in good condition and written confirmation of what will satisfy each requirement. Put every agreed change in writing and make sure it is attached to the franchise documents, not just in an email. Because the PIP is tied to your franchise agreement, have your attorney review the final PIP and related documents before you sign.

How a PIP interacts with FF&E reserves and financing

An FF&E reserve is the money set aside for replacing furniture, fixtures and equipment over time, and it is often required by the franchise agreement, the management agreement or the lender. A PIP can draw that reserve down quickly or exceed it entirely, so compare the reserve balance and planned contributions against the PIP budget early. Lenders frequently want to see the PIP, the budget and the schedule, and some will require funds to be escrowed or will set completion as a loan condition. If you are refinancing or buying, line up the PIP timeline with the loan terms so you are not forced to choose between a brand deadline and a lender requirement.

Getting help with a PIP

A PIP is a project, and it goes better with someone who has managed brand renovations and conversions from the operator's side. Our openings, conversions and transitions work is scoped per project and can cover PIP review, phasing, vendor coordination and brand communication. Owners who want ongoing oversight through the renovation can also look at our Fractional HMC plan, which includes QA and brand standards preparation.

Big Tex Hospitality Management Advisors · Updated 2026-10-17 · Reviewed by Ryan NeGron, former hotel GM and VP of Operational Management. General information, not legal or financial advice.

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