What is a hotel PIP, and when is it required?
A property improvement plan is a list of upgrades a hotel brand requires to bring a property up to its current standards. PIPs commonly come up when a franchise agreement is renewed, when a hotel changes ownership, when a property converts to a new brand, or after inspections find areas below standard. Scope and deadlines are set by the brand and vary widely.
A PIP can be small, such as replacing soft goods and lobby furniture, or large, such as full guest room renovations, new bathrooms and exterior work. The franchise agreement and brand standards govern the details, so review them carefully with the brand and your own advisors. This article covers funding, not franchise or legal advice.
What does a PIP budget usually include?
A PIP budget usually splits into FF&E, construction, systems and technology, and exterior and public areas. It should also include design fees, project management, the revenue lost while rooms are out of service, and a contingency. Owners who price only the listed items often come up short, because rooms taken out of inventory cost money every night.
- FF&E: case goods, beds, seating, soft goods, lighting, televisions, artwork.
- Construction: bathroom renovations, flooring, wall finishes, accessibility improvements.
- Systems and technology: room HVAC units, Wi-Fi, door locks, property technology.
- Public areas and exterior: lobby, breakfast area, fitness room, signage, parking lot, façade.
- Soft costs: design, procurement, project management, permits.
- Displacement: revenue lost from rooms out of service.
| PIP cost | Examples | Usual funding |
|---|---|---|
| FF&E | Case goods, beds, soft goods, lighting, TVs | Equipment financing |
| Construction | Bathrooms, flooring, accessibility work | Term loan |
| Technology and systems | Room HVAC, locks, Wi-Fi | Equipment financing |
| Public areas and exterior | Lobby, signage, façade | Term loan |
| Displacement and gaps | Rooms out of service | Line of credit or working capital |
How is PIP work usually funded?
Many owners split the PIP by type of cost. FF&E and technology fit equipment financing, since the items are identifiable and typically serve as collateral. Construction and public-area work fit a term loan. Displacement and project cash needs may fit working capital or a line of credit. Mortgages and property loans are handled by real-estate lenders, which these pages do not cover.
Splitting matters because FF&E wears out faster than a renovated bathroom. Matching terms to useful life keeps you from paying for furniture after it has been replaced. See equipment financing and term loans, and read about small hotels and inns for broader context.
How do PIP deadlines affect the funding timeline?
Brand deadlines set the pace, and FF&E procurement lead times can be long. Work backward from the completion deadline: installation, delivery, manufacturing, ordering, design approval and funding. Funding often needs to be in place before FF&E orders are placed, which can be months before installation. Missing a brand deadline may carry consequences, so build slack into the schedule.
A practical sequence:
- Review the PIP with the brand and get scope clarifications in writing.
- Get design, contractor and FF&E procurement quotes.
- Map procurement lead times against the deadline.
- Arrange funding before orders are placed.
- Schedule room work during lower-occupancy periods.
Can a PIP be completed in phases?
Often, yes, if the brand allows it. Phasing lets a hotel renovate one floor or wing at a time, keeping most rooms sellable. It typically raises total cost through repeated contractor mobilization and extends the disruption, but it protects cash flow. Some brands set milestones for each phase. Confirm with the brand before planning funding around a phased schedule.
Phasing also lets funding follow the work. Equipment financing can be arranged for each phase's FF&E order, and a line of credit can absorb timing gaps between phases. For renovation planning outside brand requirements, see how boutique hotels fund a renovation.
What do funders review for PIP funding?
Funders typically review the PIP document, quotes, a full year or more of deposits, occupancy trends, existing debt including the mortgage, and credit. Requirements vary by product and funder; many look at time in business, monthly revenue and credit. A clear schedule showing when rooms go offline and return helps a funder see how payments fit.
Some approvals come within a day or two, depending on documents, but PIP projects are often larger and take longer to finalize. Gather documents early, especially if the PIP is tied to a sale or franchise renewal with a fixed date. See how the funding process works.
What you’ll typically need
- The brand's property improvement plan
- Contractor, design and FF&E quotes
- A full year or more of bank statements and occupancy reports
- Existing mortgage and loan details
- Owner identification and business details
Frequently asked questions
Can a hotel fund a PIP without a new mortgage?
Many owners fund PIP work with equipment financing for FF&E and a term loan for renovation, without changing their mortgage. Whether that fits depends on the PIP's size and your existing obligations. Mortgage and property loans are handled by real-estate lenders, a separate category.
Can FF&E in a PIP be financed separately from construction?
Yes, and it often should be. FF&E is identifiable equipment that typically serves as collateral, while construction is not. Separating them lets you match terms to useful life and can lower overall cost. Ask procurement and contractors for separate quotes.
What happens if FF&E arrives late?
Late deliveries can push rooms offline longer and threaten brand deadlines. Order early, confirm lead times in writing and keep a reserve or line of credit for displacement. Talk to the brand promptly if a delay could affect a required completion date.
Do funders care about the hotel's occupancy?
Yes. Occupancy and deposits show how the property performs and how payments will fit through seasonal swings. Providing a full year of occupancy reports and bank statements helps funders read slower months in context. If a PIP will take rooms offline, show how occupancy is expected to recover once work is finished.
Is a PIP ever negotiable?
Scope and timing are set by the brand under the franchise agreement, and some owners discuss clarifications or schedules with the brand. That is a question for the brand and your own advisors. Get any agreed changes in writing before arranging funding around them.
Meet the deadline with funding in place
Share your PIP and quotes, and we will look for options through our funding partners.
Updated September 14, 2026 · OpenTab Capital Funding Team