The commercial reality · Cost Per Key
The Number Everybody Uses and Few Define
Owners, lenders and brands all talk in cost per key, and the figure means different things depending on what was counted.
Key count, the scope you are facing, and your occupancy pattern. Those three tell us whether the program is achievable.
Occupied
Guests are inside the building while we work
Per key
The number that decides whether the project works
Shoulder
Florida seasonality dictates the program
Licensed
General contractor, licensed in the state of Florida
Two figures, both correct, not comparable
One cost per key includes public areas, food and beverage, back of house and soft costs. Another counts only the guest room scope. Both are honest and they are not comparable, which means benchmarking against a number from another property or another contractor is frequently meaningless.
The figure also gets quoted across projects of different scope entirely. A guest-room-only refurbishment and a full renovation including public areas, back of house and infrastructure produce very different numbers, and both circulate as cost per key with no indication of which is which.
What to define before comparing
- Whether public areas and outlets are included.
- Whether back of house and plant are included.
- Whether furniture and fittings are in or procured separately.
- Whether soft costs and contingency are inside the figure.
- Whether displaced revenue is counted anywhere at all.
How to normalize a comparison
Establish for each figure whether it includes public areas, food and beverage, back of house, infrastructure, furniture and fittings, soft costs and contingency. Then rebuild both on the same basis before comparing anything.
It is tedious and it is the only way the comparison means anything. A benchmark taken from another property without doing it is a number that happens to be about hotels.
How we handle it
- 01State exactly what our cost per key includes.
- 02Report it consistently through the project.
- 03Break it out so any comparison can be normalized.
- 04Flag when a benchmark you are given is not comparable.
Ask any contractor quoting a cost per key exactly what is inside the number. The answer varies enormously, and a figure that looks competitive frequently excludes scope that has to be paid for regardless.
Said plainly
Where we stop
We will not quote a cost per key without stating its scope. A bare number invites a comparison that is not real, and that helps nobody.
FAQ
Common questions
- Why do cost per key figures vary so much?
- Because they include different things. Ask exactly what is inside the number.
- Should FF&E be included?
- Either way, as long as it is stated. Undeclared is what makes comparison meaningless.
- Is displaced revenue in it?
- Usually not, and it should be in the appraisal somewhere.
- Can we benchmark against another property?
- Only after normalizing what each figure covers.
What we renovate
Guest Rooms
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Guest Bathrooms
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Corridors & Circulation
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Lobby & Public Areas
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Food & Beverage
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Pool Deck & Exterior
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Next step
Find out what is actually wrong with it.
An inspection, photographs of what we found, and a written scope. If the honest answer is that it can wait another season, that is the answer you will get.