A property improvement plan (PIP) sets out the changes required to bring a particular hotel into line with a brand’s requirements. It is commonly required when an existing hotel converts to a new brand or renews its franchise agreement. Its scope may range from replacing furniture and signage to altering layouts, upgrading engineering systems and introducing new operating technology. For an owner considering a franchise agreement, the PIP helps define the physical and financial commitment that accompanies the right to operate under the brand.
The PIP also has a contractual role. When incorporated into the franchise documents, its requirements can become binding obligations linked to completion dates, inspections, approval to open and continued affiliation. The accompanying project provisions may give the brand approval rights over consultants, designs, materials and changes while leaving ownership responsible for delivery and cost. Understanding that relationship is essential to assessing the proposed franchise arrangement.
Property Improvement Plans (PIPs) in Hotel Franchise Agreements
What Is a Property Improvement Plan?
A Property-Specific Statement of Requirements
Brand standards describe the product and operating environment expected across a hotel system. The PIP applies those expectations to an individual property, identifying where its existing condition, facilities or configuration require alteration. Two hotels entering the same brand can therefore receive substantially different PIPs. The required works depend on the building, its condition, previous investment, intended positioning and the terms agreed for affiliation.
A PIP may identify individual replacements, describe required outcomes or refer to further design work. Some items can be defined precisely at the outset, while others require surveys, drawings or specialist assessment before their full implications become clear. A requirement to replace guestroom televisions is relatively contained compared with an instruction to reconfigure the arrival experience or improve service circulation. The level of detail determines how confidently the owner can assess cost, feasibility and timing.
More Than a Cosmetic Refurbishment
The term can suggest a programme of decorative improvements, but a PIP may extend much further. Guestroom finishes and public-area furniture are visible elements of the branded product, while kitchens, service access, ventilation and technology support its operation. Deficiencies in those less visible areas can affect service quality, operating costs and the ability to deliver the intended experience. A conversion assessment can consequently identify substantial work in a hotel that initially appears presentable.
A PIP can also distinguish physical condition from suitability for the proposed brand. A recently refurbished installation may remain incompatible with the intended product, while an older element may be acceptable for retention. The owner should therefore understand whether a requirement addresses deterioration, performance, safety, brand identity or a combination of these factors. That distinction explains both the reason for the investment and the scope for considering alternatives.
Why a Brand Requires a PIP
Protecting the Brand Promise
A franchise brand depends partly on guests recognising a consistent level of accommodation and service across different properties. An individual hotel that falls short can affect perceptions of the wider system as well as its own performance. The PIP gives the brand a means of specifying changes before accepting an existing building into that system or continuing a relationship on revised terms. Its purpose is to establish an acceptable property, rather than simply attach a new name to the existing operation.
Consistency does not necessarily require identical buildings. Brands may accommodate different layouts, local design influences and property constraints while retaining essential product characteristics. The contractual question is which requirements permit that flexibility and which the brand treats as necessary for affiliation. An owner should expect those boundaries to be established through the proposed documents and approvals rather than inferred from other hotels carrying the same flag.
Aligning Brand Requirements with the Asset
The brand and owner can share an interest in improvements that strengthen competitiveness, guest satisfaction and long-term condition. Their priorities may nevertheless differ over the scope, timing or cost of particular items. A brand may favour consistency across its network, while ownership needs to consider the local market and the remaining useful life of existing installations. The PIP is one place where those interests become concrete investment decisions.
This makes the proposed schedule commercially significant before the franchise is signed. A hotel may be attractive under one brand because it fits the existing building, yet require extensive changes to enter another. Headline franchise fees alone do not reveal that difference. The capital obligations associated with affiliation form part of the cost of selecting the brand.
When a PIP May Be Required
Conversion of an Existing Hotel
A conversion PIP identifies changes needed when an independent hotel or a property associated with another brand enters the proposed system. It may include visible identity changes alongside improvements to accommodation, facilities and supporting infrastructure. The scope depends on the difference between the existing property and the product the incoming brand is prepared to accept. Conversion can therefore involve anything from a limited adaptation to substantial repositioning.
Some works may be conditions of opening under the new flag, while others may be expressly permitted afterwards. This distinction affects when the owner receives the benefit of affiliation and how much investment is needed beforehand. Permission to complete certain items later should not be assumed from discussions about an early opening date. The contractual documents should identify the deferred requirements and the conditions attached to them.
Acquisition or Change of Ownership
An existing hotel’s current affiliation does not establish the terms available to a purchaser. A transfer may require brand consent, a replacement franchise agreement or a further review of the property. The incoming owner may consequently face improvement obligations even where the hotel continues trading under the same name. Previously approved exceptions or deferrals also need to be checked for their treatment on transfer.
This can influence the economics of acquiring a branded asset. The seller’s historic expenditure and current operating approval do not necessarily establish the buyer’s future capital requirement. Outstanding work, proposed new requirements and the status of existing concessions should be understood alongside the purchase terms. The relevant commitment is the one applicable to the purchaser’s proposed franchise arrangement.
Renewal and Continued Affiliation
A brand may seek further improvements when the franchise term is renewed, or a new agreement is negotiated. The property may have aged, standards may have evolved, or its market position may require reinvestment. A renewal PIP can therefore become part of the consideration for continued affiliation. Assess its cost alongside the proposed relationship’s duration and commercial terms.
Recent refurbishment can be relevant to that assessment without automatically settling it. The brand may accept completed works, require limited adaptation or identify additional investment. Records of previous approvals and the condition of existing installations help establish the position. The owner should understand what the new commitment requires rather than assume that expenditure during the previous term satisfies it.
The prospect of a renewal PIP should also inform the owner’s assessment of the franchise term. A shorter agreement may bring forward the point at which continued affiliation depends on further investment and acceptance of revised commercial terms. Renewal may also give the brand an opportunity, subject to the agreed renewal rights, to reconsider properties it regards as underperforming or no longer suited to its network. Any area of protection deserves particular attention, including whether it continues on renewal or may expire or be renegotiated. Owners should weigh these uncertainties against the flexibility of a shorter commitment, while recognising that a longer term does not necessarily prevent refurbishment requirements arising during the agreement.
What Typically Appears in a PIP?
Guestrooms and Bathrooms
Guestroom requirements can cover layouts, furniture, bedding, finishes, lighting, curtains, electrical provision and in-room technology. Bathrooms may be assessed for condition, fittings, ventilation, waterproofing, layout and the suitability of the guest experience. Some changes concern appearance, while others address durability, maintenance or performance. The extent of intervention depends on the existing installation and the requirements accepted for the property.
Room configuration can introduce more substantial implications than a decorative schedule suggests. Requirements concerning accessible accommodation, connecting rooms or a different room mix may affect walls, doors, services and circulation. Existing structural arrangements can limit the solutions available. A PIP may therefore identify an outcome that still requires design development before ownership can understand the complete works.
Public Areas and Guest Facilities
The arrival experience, reception, lobby, restaurants, bars and meeting facilities can be central to a brand’s positioning. A PIP may require new finishes and furniture or a wider reorganisation of these spaces. Lighting, acoustics, signage and the relationship between different uses can also form part of the requirements. The intended outcome may involve changes to how guests move through and use the hotel.
Leisure facilities require similar consideration when they form part of the proposed product. Fitness rooms, swimming pools, spas, and family facilities can introduce requirements for capacity, access, equipment, and supporting services. A space that is available within the building is not necessarily suitable for its intended use. Technical feasibility and operating implications help determine what the requirement means in practice.
Back-of-House and Service Facilities
A PIP can address areas guests rarely see because those spaces support the promised service. Kitchens, stores, housekeeping facilities, laundry arrangements, staff areas and delivery access may require improvement or reconfiguration. Their location and capacity affect labour efficiency, hygiene, maintenance and the separation of guest and service activity. Inadequate support facilities can undermine an otherwise attractive hotel.
Changes in this area can have wider implications for the building. A service lift, revised kitchen connection or additional storage may require the reassignment of space and alterations to engineering systems. Specialist advice may be necessary to define the solution. Owners should expect a PIP to consider operational suitability as well as the appearance of guest-facing areas.
Engineering and Building Performance
Engineering requirements can concern heating, cooling, ventilation, water systems, electrical installations, lifts and building controls. The brand may seek improvements where existing systems cannot support the proposed facilities or operating expectations. Some requirements address reliability or capacity rather than visible condition. Equipment that is functioning during an inspection may still need assessment before its suitability can be established.
The PIP may also incorporate the brand’s environmental and sustainability requirements. These can include more efficient heating and cooling, water-saving installations, improved insulation, renewable energy and systems for measuring consumption and associated greenhouse gas emissions. Depending on the brand and property, the requirements may extend to environmental certification or measures supporting wider emissions-reduction commitments. Owners should establish which measures are mandatory for affiliation and which are recommendations or longer-term objectives, particularly where terms such as carbon neutrality or net zero are used.
Such requirements can introduce investment beyond replacing worn equipment, especially where an existing installation remains operational but falls short of the proposed efficiency standard. Assess the financial impact through capital cost, potential operating savings, maintenance requirements, and any certification or reporting expenses. Feasibility also depends on the building, climate, local energy supply and availability of suitable technology and servicing. The agreed scope should identify the required outcomes, completion dates and evidence of compliance rather than leave the obligation expressed as a general commitment to sustainability.
Fire Safety, Security and Accessibility
Safety-related requirements can involve detection, alarms, escape arrangements, fire separation, emergency systems and other protective measures. Security may include access control, surveillance and the organisation of relevant facilities. Accessibility can affect arrival, circulation, guestrooms and shared amenities. These subjects can require coordinated assessment across the building rather than isolated equipment purchases.
Dead-end corridors and inadequate escape routes can be particularly significant PIP items because resolving them may require changes to the building’s layout. Depending on the assessment, solutions may involve reconfiguring or relocating guestrooms, creating additional corridor connections, introducing fire-resisting separation, or providing another escape route. Fire escape provisions can also require substantial alterations to stairs, protected routes and final exits. Such works can affect room numbers, usable floor area, and the viability of the proposed conversion, so it’s important to identify them before the owner commits.
Mandatory fire and life safety requirements generally offer limited scope for waiver or deferral. There may be flexibility in the technical solution where an alternative is accepted by the relevant authorities and the brand, but ownership should not assume that the required safety outcome is negotiable. The applicable legal requirements and the brand’s contractual standards must also be distinguished: brand approval does not replace statutory consent, while meeting a local minimum may not satisfy the agreed brand requirements. The right solution requires a property-specific assessment rather than relying on specifications or concessions accepted at another hotel.
Technology, Signage and Operating Equipment
Technology requirements may include property management systems, reservations interfaces, networks, guest connectivity and other platforms needed for participation in the brand system. Installation can involve licences, hardware, cabling, configuration, data preparation and training. A short technology entry in the PIP may therefore represent a substantial implementation commitment. Its relationship with separate service or system agreements should also be understood.
The schedule may extend to signage, uniforms, operating supplies and other items needed to present and operate the hotel under the brand. These are sometimes less prominent than construction costs but can be necessary for opening. Existing stock may be retained, adapted or replaced depending on its condition and identity. The overall commitment should capture these requirements even where they sit outside the main building contract.
The PIP Within the Franchise Contract
The Improvement Schedule and the Project Rider
The physical works schedule and the provisions governing delivery perform different functions. The PIP identifies property-specific improvements, while a project rider or similar addendum may regulate design, appointments, approvals, timing, inspection and opening. They may appear together or in separate documents. Their combined effect determines what the owner must deliver and the controls applying to that delivery.
This distinction explains why the renovation list cannot always be read in isolation. A short schedule may sit within a broader obligation to meet technical standards, approved plans and other specified requirements. Conversely, a negotiated exception in the PIP may qualify a general standard elsewhere. The documents should be read together, with inconsistencies and their order of precedence understood before commitment.
Requirements Incorporated by Reference
Franchise documents may refer to standards and manuals rather than reproduce their contents. Those references can make material requirements relevant to the project even where they are absent from the itemised schedule. The owner needs access to the applicable documents and clarity about their versions and status. Otherwise, the apparent scope may be narrower than the contractual obligation.
The relationship with approved drawings is equally important. Detailed plans can translate general requirements into a property-specific solution, but approval may carry conditions or preserve obligations elsewhere. Ownership should understand whether the approved design settles an issue or remains subject to further review. The contractual position depends on the wording governing those approvals.
Initial Assessments and Final Obligations
An initial review may be intended only to establish whether further investigation and negotiation are worthwhile. It can rely on limited inspection, available information and provisional assumptions. As a result, its cost estimate may differ from the programme required by the final agreement. The owner should distinguish that preliminary assessment from the binding commitment.
Unresolved matters should remain visible during that transition. Items described as satisfactory may not have received specialist testing, while recommended changes may later become mandatory. Before signing, the owner needs to understand which conclusions are confirmed and which depend on further investigation. An indicative assessment should not acquire unintended certainty simply because its figures have entered the investment appraisal.
Design Requirements and Brand Approvals
Approval of Consultants and Specialist Advisers
The project provisions may require the owner to appoint suitably qualified independent consultants. Particular disciplines can include interior design, engineering, food service, lighting, audiovisual systems and specialist guest facilities. The brand may reserve approval rights over those appointments. An existing relationship between the owner and an adviser does not necessarily satisfy the proposed contractual process.
The appointment provisions should explain what information is needed and how to obtain approval. Any response period or consequence of silence should be understood within the relevant clause. Approval of a consultant should also be distinguished from approval of their subsequent proposals. The owner remains responsible for ensuring that professional appointments cover the services needed to deliver the project.
Approval of Plans and Specifications
The brand may require submissions at different design stages and across several disciplines. These can include layouts, drawings, renderings, material selections, equipment schedules, landscaping and signage. Approval rights allow the brand to assess conformity before work becomes difficult or expensive to change. They also make the review process relevant to the project programme.
The owner should expect approved proposals to establish constraints on subsequent delivery. A substitution or layout change may require further consent even where the owner considers it equivalent. Informal site decisions can therefore create contractual issues if they depart from accepted plans. The scope of the approval and the treatment of outstanding comments should be clear.
Reference Properties and Quality Benchmarks
Some project provisions may use an agreed reference property to help describe the expected quality. This can supplement written standards by illustrating finishes, furniture or the overall level of the product. Its usefulness depends on identifying what is being compared and the relevant condition or date. Otherwise, a general reference to another hotel can leave considerable room for disagreement.
A reference property does not necessarily provide a complete specification. Different buildings, climates, markets and operating arrangements can require different solutions. The comparison should therefore be translated into requirements suitable for the subject hotel. Ownership needs enough definition to understand the obligation without assuming that visual similarity resolves technical suitability.
Timing, Inspection and Permission to Open
Commencement and Completion Obligations
Project provisions can specify when works must begin and when the hotel must be completed. They may also require the owner to pursue the project diligently or meet intermediate milestones. These obligations make timing part of the franchise commitment rather than solely a matter between owner and contractor. Their relationship with the anticipated opening date should be understood.
Different dates can carry different consequences. A design milestone, construction completion date and final deadline for branded opening are connected without necessarily being interchangeable. Delay relief applying to one stage may not automatically alter every other date. The owner should understand the combined timetable and the provisions governing extensions.
Phasing and Deferred Works
The brand may accept completion in phases where the property and proposed arrangement allow it. Some items may remain outstanding after the branded opening, subject to express conditions and later deadlines. This can change the timing of investment without removing the obligation. The documents should identify which works are deferred and what continued operation requires.
Deferral may also depend on maintaining an existing installation in acceptable condition. Remaining useful life is an assessment rather than a guarantee, and deterioration can affect the practical viability of retention. The owner should distinguish permanent acceptance from temporary tolerance. That difference matters for future budgets and the treatment of the property on renewal or sale.
Inspection Rights During the Project
The brand may reserve the right to inspect progress and conformity with approved plans. The owner may be required to provide information and secure cooperation from consultants, contractors and others involved. These rights help the brand monitor whether the proposed hotel is being delivered as agreed. They can also identify discrepancies requiring correction before final review.
An inspection should not automatically be understood as supervision of the owner’s construction contract. The brand may preserve a limited purpose for its reviews and disclaim responsibility for matters outside that purpose. Ownership still needs appropriate project management and professional oversight. The distinction between brand monitoring and the owner’s delivery responsibilities remains important throughout the works.
Authorisation to Open Under the Brand
Construction completion does not necessarily establish the right to open as a branded hotel. The agreement may require written acceptance of the project, installation of specified equipment, completion of other conditions and payment of amounts due. These requirements can extend beyond the contractor’s handover. Opening authorisation is therefore a separate contractual consideration.
The review process can have direct financial consequences where bookings, recruitment and marketing depend on a target date. A stated inspection period may be a firm obligation or a qualified undertaking, depending on the wording. Ownership should understand the required notice and the impact of outstanding items. Any permission to open with deferred works should be recorded with its conditions.
Costs and Allocation of Responsibility
The Owner’s Financial Commitment
The proposed documents may place the project cost on the owner, including design, professional fees, permits, equipment, furniture, and operating inventory. The full commitment can exceed the headline construction estimate. It may also involve transition expenditure, lost trading and additional liquidity while works continue. Those consequences form part of the economics of affiliation even where they are not all itemised in the PIP.
A preliminary allowance should be assessed in light of its assumptions and exclusions. A blank or zero figure may indicate an unresolved assessment rather than confirmation that no expenditure is needed. Working capital and finance costs may sit outside a technical review entirely. The owner should understand what the stated budget represents before relying on it.
Brand Control and Delivery Responsibility
The brand can hold approval rights while the owner retains responsibility for design and construction. Acceptance of consultants, plans or completed works may be defined as permission for franchise purposes rather than a warranty of their adequacy. This allocation allows the brand to protect its system without assuming the owner’s development role. The distinction should be understood when evaluating the extent of support being offered.
The owner’s professional team therefore remains important even where the brand is closely involved. Technical verification, statutory compliance, coordination and construction quality need clear responsibility under the relevant appointments. Gaps can arise if advisers assume that brand approval settles those matters. The contractual framework should be understood across both the franchise documents and the project agreements.
Changes, Exceptions and Continuing Obligations
Changes to Standards During Delivery
A PIP may take long enough to implement that brand requirements evolve. The owner should understand whether assessment refers to standards applying at agreement, design approval or completion. The treatment of ordered materials and completed work is particularly significant where later changes could require replacement. Any agreed protection should be expressed in the documents.
The franchise agreement may also preserve obligations that continue independently of the initial PIP. Finishing the listed works may not discharge duties concerning maintenance, future refurbishment or updated systems. This affects the long-term cost of affiliation. The initial programme should be assessed as one part of the franchise relationship rather than its final investment requirement.
Waivers and Property-Specific Exceptions
Existing buildings may require exceptions where standard solutions are impractical or disproportionate. A waiver can permit retention of an element or approval of an alternative, subject to defined conditions. Its effect depends on its scope, duration and authority. Informal discussions provide an uncertain basis for assuming that a general obligation has been removed.
A useful exception identifies what is accepted and what can cause that acceptance to end. Refurbishment, deterioration, renewal or transfer may be relevant depending on the agreement. Those conditions determine whether the concession produces a lasting saving or deferred expenditure. Clear records also help future owners and asset managers understand the remaining commitment.
Non-Completion and Contractual Remedies
Failure to meet PIP obligations can engage provisions elsewhere in the franchise agreement. These may address notices, opportunities to remedy, inspection costs, opening approval or termination. The consequences depend on the applicable documents and law. A missed item should not be assessed solely by its construction value where it affects a wider contractual condition.
Extensions and other relief also depend on the agreed wording. The documents may distinguish circumstances giving an entitlement from those left to the brand’s discretion. Notice, evidence, mitigation and fees can affect the outcome. A request for relief should not be assumed to suspend an existing deadline unless the agreement gives it that effect.
What the PIP Means for the Owner
Assessing the Franchise Commitment
The PIP translates brand affiliation into a property-specific investment obligation. Its significance lies in the works themselves, the approvals governing them and the consequences attached to delivery. A seemingly modest schedule can become substantial when associated requirements are considered. Conversely, an agreed retention or suitable alternative can materially improve the investment case.
The owner should assess that commitment alongside fees, term, operating arrangements and exit provisions. Some expenditure protects affiliation, while other improvements may support higher revenue or lower operating costs. Those benefits require a realistic property and market appraisal. Brand acceptance does not establish a guaranteed return on the capital invested.
Understanding the Position at Renewal or Sale
A completed PIP provides an important record of what has been delivered and accepted. Approved drawings, waivers, inspection records and completion confirmations help explain the property’s position. They can support later discussions with the brand, lenders or purchasers. They do not necessarily establish that future investment will be unnecessary.
The next transaction may involve different standards, terms or approval conditions. A purchaser will consider those obligations alongside earnings, building condition and remaining capital needs. Ownership should therefore distinguish completed investment from continuing commitments throughout the holding period. The value of the PIP lies in understanding both the property the brand requires now and the contractual relationship within which that property must operate.
Further resources:
See HDG – Hotel Franchise Agreement (HFA) / Hotel License Agreement (HLA / ILA)
See HDG – Area of Protection (AOP) in Hotel Management and Franchise Agreements
See HDG – Hotel Operator Links
eCornell – “Hotel Management & Owner Relations“
Hospitality Net (February 2025) – “The Owner’s Guide to Hotel Brand Selection & Franchise Negotiation“