As we look ahead to 2026, we’re met with an industry at an inflection point, where aging assets, constrained budgets, and evolving guest expectations intersect. At Continental Contractors, we’ve seen firsthand that success in this environment isn’t about cutting deeper; it’s about working smarter, collaborating earlier, and redefining how Value Engineering fits into the hotel renovation conversation. Continental Contractors’ COO Renee Bagshaw reached out to industry colleagues to discuss their perspectives on how hospitality leaders can work together to make the numbers work, without compromising what matters most.

Making the Numbers Work in 2026: The Smarter Side of Value Engineering

Hotel renovation has always been a balancing act: aim high, spend smart, keep the guest happy, and keep the project moving. For years, Value Engineering (VE) was the tool that helped make that possible. It created relief in tough budgets, helped projects survive unpredictable markets, and made teams feel like they had options.

But here’s the truth many of us in hospitality know: VE is being asked to solve problems it was never designed to solve. As we look ahead to 2026, brands are pushing long-delayed CapEx, owners are facing harder financial constraints, and the industry is staring at a growing gap between the needs of aging assets and the budgets available to address them.

We know that tension well. We see it every day on renovation projects across the country. And that’s why it’s time for a clearer conversation about where VE helps, and where it starts to cost more than it saves.

When VE Starts to Erode Guest Experience

If there is one area where VE has truly reached its limits, it’s in finishes and materials that impact what guests see, touch, and judge. Guest sentiment research continues to reinforce that room condition is one of the biggest drivers of satisfaction and return intent. And guests are quick to spot the weak links: lighting that feels off, flooring that wears too fast, veneers that don’t hold up to luggage and housekeeping traffic.

As Billie Thorne, Principal at C+TC Design Studio, put it perfectly, “Quality materials are being replaced with less expensive options that do not offer the same performance… These substitute products simply are not designed to withstand the heavy use found in hospitality spaces.”

And she’s right. The upfront savings disappear the moment a finish fails early. What starts as a cost-cutting exercise often turns into higher maintenance budgets, more out-of-order rooms, lower guest scores, and in some cases, earlier re-renovation. None of those outcomes support an owner’s long-term financial strategy.

When It Comes to Aging Systems, VE Can’t Turn Back Time

A large percentage of full-service and luxury hotels are operating with mechanical, electrical, and plumbing systems well past their expected lifecycle. Industry CapEx research has shown that many properties delayed these investments for years, hoping to squeeze out just a little more life. We all know how that story ends.

Skipping major system upgrades during renovation doesn’t eliminate the cost, it just pushes it into a higher-risk, higher-cost moment. Emergency replacements happen at the worst possible times, create maximum guest disruption, and almost always require workarounds that cost more than if the upgrade had been handled during the scheduled renovation. 

Renovation is the most cost-efficient window to make lifecycle corrections. Waiting for failure rarely ends well for anyone.

Manufacturers Are Feeling the Strain Too

The ripple effects of global labor costs, material inflation, and freight volatility have pushed the manufacturing side of the industry to its limits. Many suppliers simply cannot produce certain items at the historically expected VE price points anymore.

Shannon Seay, Vice President of Customer Experience at Berman Falk, captured this shift clearly. “Aggressive VE requests have resulted in manufacturers seeing gaps between clients’ requested budgets and actual cost of goods.”

As a result, more procurement teams and manufacturers are moving toward design-to-budget. It’s a healthier approach that builds realistic expectations from the beginning and protects design integrity without relying on deep cuts.

Shannon also issued an important warning we see on job sites all too often: “Ensure that items are priced as specified, in lieu of inserting alternate materials without design’s consent.” A bid that seems “too good to be true” often comes with substitutions that create conflicts, delays, or performance problems down the line. And even when VE options technically satisfy brand standards, that doesn’t automatically make them the right long-term decision for the property.

VE That Disrupts Sequencing Can Derail a Schedule

VE isn’t just about materials. It affects constructability too.

When VE alters substrates, field tolerances, fixture requirements, corner protections, or lighting pathways, it can unintentionally change how the entire renovation needs to be sequenced. In a business where owners are compressing schedules more than ever, that’s a risky trade-off. Small VE decisions can create big ripple effects, and re-work, delays, and guest-impact concerns can wipe out any savings the owner hoped to capture.

Let’s Address the Owners’ Perspective Head-On

Whenever we talk about VE, we hear a common, and fair, response from owners: “We get it. But we’re being pushed to renovate right now, and our budgets aren’t increasing. VE isn’t optional.”

We hear you. The financial environment for hotels is incredibly tight. Brand requirements are coming due. Debt costs are up. Operating margins are strained. And we genuinely understand that owners aren’t trying to cut corners, they’re trying to make the numbers work.

As Michael Havener, SVP of Development, Design and Construction at Ryman Hospitality Properties reminds us, “Value Engineering is a misnomer for improper budgeting, mismanagement of the design process… Owners need to properly budget to their financial objectives and properly manage design to meet their expectations. This is Value Ensuring — the real VE.”

Owners shouldn’t shoulder the burden alone. The entire project ecosystem of design, purchasing, brand, and contractors must be part of building a realistic, aligned plan from the beginning. This article isn’t about eliminating VE. It’s about right-sizing its role and using it the way it was meant to be used – intentionally, not reactively.

Where VE Still Makes Sense

VE absolutely has a healthy place in renovation when it’s done thoughtfully. It can help:

  • refine details that don’t impact function or perception
  • reduce redundancy in back-of-house areas
  • simplify scope to improve sequencing
  • right-size features that guests won’t notice
  • improve constructability without compromising design

This is VE at its best: strategic, collaborative, and grounded in long-term performance.

What the Future of Renovation Requires

Brands are raising expectations. Guests are not lowering theirs. And many hotels are aging faster than their budgets are growing. That’s a tough equation for owners and an opportunity for the industry to evolve.

Collaboration has never mattered more. In fact, Billie Thorne also put this sentiment into words — one that every project team should pin to their wall: 

“The most effective way to keep projects on track for budget, schedule, and guest experience is not aggressive cost-cutting, but strong collaboration.”

At Continental Contractors, strong collaboration means more transparency up front. More honest discussions about lifecycle needs. More design-to-budget planning. And more realistic alignment between the dollars available and the scope required. These are the particular touch-points our teams strive to meet throughout the duration of every project.  

Because at the end of the day, the question isn’t: “Where else can we cut?”

It’s: “Where should we invest so we don’t pay for this twice?”

VE isn’t disappearing, but its role is changing. And that change will ultimately make renovations stronger, more durable, and more aligned with real-world operating needs.