Hotel owners must periodically rebrand their properties to stay competitive as customer expectations change. Rebranding involves renovating amenities and can cost millions. However, hotel owners have opportunities to reduce the costs of rebranding through specialized tax incentives like cost segregation. Cost segregation allows owners to depreciate components like carpeting, lighting, and landscaping at accelerated rates, providing immediate tax savings. These tax savings can directly offset the costs of rebranding renovations. Hotel owners who have renovated since 1987 through rebranding may be eligible to capture these benefits through a cost segregation study.

1. Hotel Re-branding & Cost Segregation
Modified on: Wed, 29 Jun, 2016 at 1:18 PM
Original published online at GMGSavings.com/hotel-rebranding-cost-segregation/ 5/30/14. To share the article via social networks,
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The Hotel Industry is unique in that like a commercial product a hotel follows a definite life cycle. If a hotel owner does not
keep this in mind, their facility can quickly become worn out and dated in comparison to their competition. To stay
competitive, Owners must acknowledge that there will be constant new brand competition. A newer, swankier hotel that
offers the latest amenities to its guests will quickly put an outdated hotel out of business. This fact leaves few options of
staying competitive for a hotel owner. The most prominent option would be to rebrand. What does “rebranding” entail?
Rebranding can be a broad term ranging from a simple revamping of a logo but more often is a much larger undertaking
with the ultimate goal of retaining guest loyalty and awareness. Rebranding is especially important today because of major
social, environmental and technological changes that have taken place over the past five years. For example, five years ago
wifi throughout a hotel was rare, flat screen televisions were a novelty, the expectation of a hot breakfast almost unheard of,
and eco friendly was a word most people were unfamiliar with. All of those ideals have changed, and are now an
expectation for most travelers. This new expectation has forced hotel brands to insist their franchises undertake multi million
dollar rebranding to live up to their flag.
What does this mean for Hotel Owners?
There is a little known opportunity for Hotel Owners that would directly affect the rebranding of their organization. The
opportunity is Specialized Tax Incentives, specifically:
◾ Engineering Based Property Cost Allocation (Cost Segregation) (http://gmgsavings.com/services/cost-
segregation/)
◾ Property Tax Reductions (http://gmgsavings.com/services/property-tax-mitigation/)
◾ Bonus Depreciation
◾ Various Energy Based Credits

2. Specialized tax credits are an essential fiduciary component when building, purchasing or renovating a hotel or motel.
These credits affect rebranding and the constant renovation of non-structural components of their building such as:
◾ Carpeting / Flooring
◾ Decorative Lighting
◾ Cabinetry
◾ Dedicated Electrical & Plumbing Systems
◾ Power Generators
◾ Security Systems
◾ Wifi / Internet Cabling
◾ Parking Lots
◾ Curbs
◾ Sidewalks
◾ Landscaping
◾ Fountains
◾ And many more…
A Cost Segregation Study is an engineering based tax analysis in which these types of components are broken out and
allocated to a shorter life class, depreciating them at an accelerated rate. This means a building purchased, constructed or
renovated since January 1, 1987 and costing in excess of $500,000 should have all improvements and renovations
qualifying based on their individual completion dates. So, every hotel having performed renovations through rebranding
within that time frame have a potential benefit sitting on the take just waiting to be captured!
To determine if your facility could capture a benefit, simply contact Growth Management Group
(http://gmgsavings.com/contact-us/) and ask for a basic calculation, performed at no charge.