OPINION - Should You Close Your Hotel During Renovations or Keep It Open to Boost Revenue?

Johanna Rodriguez Cuevas
Jan 20
4 min read

Renovating a hotel is a major decision that can shape its future success. One of the toughest questions hotel owners face is whether to close the property completely during renovations or keep it open and continue generating revenue. Both choices carry risks and rewards, and the best path depends on many factors. This post explores the pros and cons of each approach, shares real-world examples, and offers practical advice for hotel owners and investors.

Eye-level view of a hotel lobby under renovation with construction materials and workers — Hotel lobby renovation in progress

The Case for Closing Your Hotel During Renovations

Closing a hotel while renovating allows for faster, more comprehensive work. Without guests, contractors can work unrestricted hours and access all areas without safety concerns. This often leads to:

Shorter renovation timelines
Ability to complete large-scale projects like plumbing, electrical upgrades, or structural changes
Higher quality finishes due to uninterrupted work
Reduced risk of guest complaints or safety incidents

For example, a mid-sized hotel in the Midwest closed for six months to completely overhaul its rooms, lobby, and amenities. The owners reported the renovation finished on schedule and within budget. When the hotel reopened, it attracted a new clientele and increased average daily rates by 20%.

However, closing means zero revenue during the renovation period. This can strain cash flow, especially if the hotel relies on steady income to cover debt or operating expenses. Some owners underestimate the financial impact of a full closure and face challenges meeting payroll or loan payments.

The Case for Keeping Your Hotel Open During Renovations

Keeping a hotel open during renovations helps maintain cash flow and keeps the property visible in the market. This approach suits hotels that can renovate in phases or focus on non-guest areas first. Benefits include:

Continuous revenue generation
Retention of loyal guests and brand presence
Ability to test new designs or services with live feedback
Avoidance of total market absence that competitors might exploit

A boutique hotel in California chose to renovate one floor at a time while operating the rest of the property. They scheduled noisy work during low occupancy periods and communicated transparently with guests. Although the renovation took longer, the hotel stayed profitable and avoided a large revenue gap.

On the downside, renovations can disrupt guest experience. Noise, dust, and limited amenities may lead to negative reviews and lower occupancy. Managing guest expectations and maintaining service quality during construction requires strong operational planning.

Factors to Consider When Deciding

Choosing whether to close or stay open depends on several key factors:

Scope and Scale of Renovations

Extensive structural or system upgrades often require closure
Cosmetic updates or phased room renovations can be done while open

Financial Position

Hotels with strong reserves or alternative income can afford closure
Properties with tight cash flow may need to stay open

Market Conditions

High demand and limited competition support staying open
Weak markets may justify closure to avoid poor guest experiences

Guest Profile and Expectations

Luxury or full-service hotels must maintain high standards
Budget or limited-service hotels may tolerate some disruption

Regulatory and Safety Requirements

Some renovations require permits that mandate closure
Safety concerns may force temporary shutdowns

Practical Tips for Renovating While Open

If you decide to keep your hotel open during renovations, consider these strategies:

Communicate clearly with guests about renovation schedules and impacts
Schedule noisy or disruptive work during off-peak hours
Use signage and barriers to separate construction zones
Offer discounts or incentives to guests affected by renovations
Train staff to handle guest complaints proactively
Plan phased renovations to minimize impact on occupancy

When Closing Is the Better Choice

Closing the hotel can be the right decision when:

Renovations are extensive and cannot be safely done around guests
The hotel needs a complete transformation to reposition in the market
Financial reserves allow for a temporary revenue pause
The expected increase in value and revenue post-renovation outweighs short-term losses

Real-World Example: A Hotel for Sale Undergoing Renovations

Currently, we have the Days Inn in Fresno, California on the market that illustrates the impact of choosing to close during renovations. This property is undergoing massive upgrades while the owner completes their Property Improvement Plan (PIP). The renovations include modernized guest rooms, upgraded public spaces, and enhanced amenities designed to attract higher-paying guests, all to finish the Dawn PIP.

Because the sellers decided to close the hotel during the renovation, the current revenue is low. This situation presents a unique opportunity for buyers. The hotel will be delivered fully renovated and ready to operate at a higher standard, but at a price reflecting the temporary revenue dip.

Investors who can manage reopening and marketing effectively stand to benefit from the improved asset without the hassle of managing renovations themselves.

Renovating a hotel is a complex decision with no one-size-fits-all answer. Closing during renovations speeds up work and improves quality but cuts off revenue. Staying open maintains cash flow but risks guest dissatisfaction and longer timelines. Carefully assess your hotel's financial health, renovation scope, and market before deciding.

If you want to explore a hotel opportunity that has just completed major renovations but currently shows low revenue due to closure during construction, consider this property on the market. It offers a fresh start with a seller-completed PIP and strong potential for growth once reopened.