In one sentence
A franchisor-required schedule of renovations to bring or keep a hotel at brand standard, funded through reserves.
The longer version
A PIP lists the improvements a hotel must make to satisfy its brand, often triggered by a sale or refinance. Lenders size reserves to fund it and track completion as a post-closing obligation.
PIP funding and completion are monitored servicing items on hotel loans, tied to the franchise and comfort letter.
Common questions
- What is a hotel PIP?
- A property improvement plan required by a franchisor listing renovations needed to bring or keep a hotel at brand standards, often triggered by a sale or relicensing.
- How do lenders handle a PIP?
- By underwriting its cost, often requiring a reserve funded at closing or over time, and tracking completion against the franchisor's deadlines.
- What happens if a PIP is not completed?
- The franchisor may default or terminate the franchise, putting the brand and the hotel's income at risk.
Keep reading
- The due diligence checklist, built to be runChecklists as systems, not documents.
- The commercial loan closing checklistWhat goes on the list and who owns each line.
- The commercial loan closing processThe five stages from term sheet to funded.
- Commercial loan softwareWhere this sits in the lending stack.