In 2018, the hospitality management group known as Gold Key | PHR completed renovations to the historic Cavalier Hotel in Virginia Beach, which has been a staple in the area since its original opening in 1927. The hotel was a premier destination for high-society folks, which included Elizabeth Taylor, Judy Garland, F. Scott Fitzgerald, and Frank Sinatra as just a few of the esteemed guests who had rented rooms in the past.
As the decades wore on, so too did the state of the structure, and it eventually fell into disrepair. Bids were placed on the property, with each potential buyer intending to demolish the historic hotel, except for Bruce Thompson, the CEO of Gold Key | PHR, who had the vision to restore the property rather than tearing it down. He, along with the Cavalier Associates with whom he placed the bid, won the sale, and Gold Key | PHR was able to execute the renovations in just four years. The cost was more than $80 million, which raises the question: How do you preserve that grand of an investment for the owners over time?
Peter Burke, director of facilities for Gold Key | PHR, has already figured out the answer. With more than 25 years of experience in facility management in commercial and industrial complexes and a four-year tenure as president of the IFMA Hampton Roads chapter, Burke uses his skill set not only to guide a team of facility engineering professionals but also to lead the “Reserve for Replacement” (RFR) process, which focuses on capital expenditure tracking.
The RFR process is derived from the same format you would find with reserve studies for HOAs or COAs. A rolling ten-year plan is laid out, which begins with identifying all the spaces within the specific hotel property and then conducting an inventory of every item in the space that is structural, mechanical, or furniture, fixtures, and equipment (FF&E). Each item in the inventory is given a projected service life for full replacement and, most importantly, a full and complete unit cost. This cost covers not only the retail cost of the item along with tax and freight but also the associated labor costs to remove and install the item along with disposition costs.
The schedules are reviewed and updated annually, breaking down into five-year schedules for project budgeting and one-year schedules for project execution.
“Maintaining the standards, specifications, and inventories (SSI) for every item in the RFR across the property helps ensure we maintain the asset to the original vision specification laid out by Mr. Thompson when the property was developed,” Burke explains. “First-class properties need to look first-class on both ‘Day 1’ and ‘Day 3650,’ ten years later.” The RFR scheduling format provides clear-cut annual project execution costs for accurate annual replacement budgeting.
Burke, a former naval officer, learned the importance of proactive preventive maintenance early on in his career. “When you take care of your equipment, it takes care of you,” Burke says. “Whether it is your ship to get you from point A to B or your weapons, they will be there for you if you take care of them.” He believes that part of what sets Gold Key | PHR apart in the hospitality industry is a focus on not only developing first-class hotels and resorts along the East Coast but on preserving those assets for the future.
“Bruce Thompson is a visionary in the hospitality development and operating arena,” Burke says. “It’s about delivering a first-class product and then developing the plans, processes, and schedules to ensure funding is available to maintain that product for years to come at the highest levels.”
As the company’s RFR subject matter expert, Burke not only cowrote the process but annually updates the scheduling and teaches the in-house training course to the property operations leadership teams, which include the GMs and engineering directors. Additionally, Burke acts as the project manager to execute many of the larger, more complex projects on the schedules, from major mechanical replacements to complete room renovations for a 300-room Hilton hotel in the portfolio.
Burke executes the RFR process not just for the hotels within the corporate portfolio of Gold Key | PHR, but for each of the food and beverage outlets as well as “Class A” office space and even mixed-use retail space and luxury residential projects. “To work for a company that makes it a priority to reinvest money into the properties to maintain and preserve these assets year in and year out,” Burke says, “is a dream come true for any facility management professional.”