The hidden cost of failing to meet brand standards in MEP systems

Introduction

In the development of hotels for international chains, MEP systems (mechanical, electrical, and plumbing) are essential to ensure efficiency, comfort, safety, and regulatory compliance. However, when these systems are not designed or installed according to the technical standards required by the brand, the consequences are often costly—in both financial and reputational terms. While we cannot disclose the names of specific projects, at MEPCALA we have witnessed firsthand the negative impact these omissions have on hotel developments in the CALA region (Caribbean and Latin America).

Costly redesigns and avoidable delays

One of the most common issues is the omission of specific technical requirements in the design documents. When the brand conducts its final audit or review and detects these deficiencies, a process of redesign, approval, and modifications begins, which can delay the opening of the hotel by weeks—or even months. In a recent case, the failure to segregate critical electrical loads required the complete rework of panels and conduits. The rehabilitation cost exceeded $250,000 and delayed the opening by over a month.

Increased operating and maintenance costs

Failure to comply with brand standards also directly affects operating costs, including maintenance and energy costs, which are integral to the financial and value proposition the brand offers to investors. For example, ignoring requirements for heat recovery in domestic hot water systems or selecting air conditioning equipment not recommended by the brand (due to efficiency or BMS integration) can significantly increase monthly energy consumption. We have documented cases where electricity usage exceeded initial projections by 20%, reducing the hotel’s profitability and hindering sustainable operation.

Last-minute retrofits to open the hotel

In several instances, hotels ready to operate have had to undergo emergency retrofits in critical areas like kitchens, mechanical rooms, or electrical centers because the installed systems did not meet code or brand expectations. This type of work, in addition to being costly, is done under pressure and out of sequence, which affects installation quality and generates contractual conflicts between contractors and owners.

Asset devaluation

A hotel that does not comply with brand technical standards is a devalued asset. Moreover, the building is at risk of rapid deterioration if key aspects such as proper humidity control—a common requirement in all hotel brands and especially critical in the hot and humid climates of the region—are not addressed, or if low-quality materials and equipment that fail to meet brand standards are used. From an investment perspective, a property requiring MEP upgrades to be transferred, renovated, or repositioned loses competitiveness compared to others that do comply. It also limits its potential to operate under other brands with similar requirements. The resale or refinancing value is impacted, as banks and funds analyze the technical condition of the property as part of their due diligence.

Legal, safety, and reputation risks

MEP systems play a critical role in building safety and operation: proper ventilation in kitchens, stairwell pressurization, bathroom exhaust, domestic hot water temperature control, and integration with building management systems (BMS), among others. Ignoring standards or installing uncertified equipment puts guests and staff at risk. It also exposes the operator and owner to lawsuits, insurance penalties, and sanctions from local authorities. Furthermore, any incident can damage the brand’s reputation, especially in today’s digital era, where a complaint or photo can go viral within minutes.

Conclusion

Compliance with MEP standards should not be seen as an extra burden, but as an investment in the quality, sustainability, and profitability of the hotel. Cutting corners to save money in the short term can result in much higher costs down the line. At MEPCALA, we’ve learned that projects making this effort from the early design stage not only avoid unpleasant surprises, but also open successfully and operate efficiently from day one.

Recommended reading:

• Why Are Brand Standards Important? (NewGen Advisory)
• Managing Risk in Luxury Hotel Construction (Partner Engineering and Science)
• Legal considerations of Branded Residential Developments (Keystone Law)

Contact

Email: Contact@mepcala.com

WhatsApp: +1 (786) 934-4948