Repositioning a waterfront hotel: where the value hides

Decide who the hotel is for

Many waterfront hotels try to serve everyone: leisure guests, conferences, weddings and corporate travellers. The result is a product that suits none of them particularly well. Before spending on refurbishment, decide which guests the location wins naturally, then design the rooms, the food and beverage and the pricing around them.

Put the water to work

A hotel on the water should earn from the water. A jetty for guests arriving by boat, marina berths, water sports, dining at the water's edge and events on the foreshore all add to what guests will pay.

Each of these needs approval from the relevant authority and careful operation, but together they are often the cheapest way to lift the average room rate.

Spend on what guests notice, and on what the sea is doing

Refurbishment money should go first to what guests see and touch. Waterfront properties also need a second budget that inland hotels do not: salt corrosion of balconies, windows and plant, and the upkeep of seawalls and foreshore structures.

Ignore that second budget and the building will be repaired later, at a much higher cost and usually at the worst time.

Check the operator agreement

Underperformance often survives because the owner cannot act on it. Review the management agreement or lease: the performance test, the fees, the owner's approval rights over budgets and capital, and the termination provisions. A repositioning is often the right moment to renegotiate.

Price the climate and insurance risk honestly

Storm surge, coastal erosion and rising sea levels are now part of every waterfront valuation, and insurers are pricing them in. Understand the property's exposure and the protection in place before committing capital, and allow for insurance costs that may keep rising.

Sequence the works around the season

Close floors in the low season, keep the best-selling rooms open, and stage the public areas so the hotel never looks like a building site in the peak months. Good sequencing protects revenue while the work is done.