Temporary shine or lasting impact? The impact of lobby renovation on guest satisfaction and financial performance

Purpose Integrating Servicescape, hedonic adaptation, and adaptation-level theories, this study examines the relationships among hotel lobby renovations, guest satisfaction, and financial performance. It aims to fill a research gap in understanding the short-term and long-term impacts of lobby renovation on guest experience and hotel profitability. Design/methodology/approach The data was collected from a 248-room luxury hotel in the southeastern United States that underwent a major lobby renovation. Guest satisfaction data were collected from TripAdvisor reviews and guest surveys, while financial performance metrics were derived from STR reports. Sentiment analysis and polynomial regression were used to analyze pre-renovation and post-renovation data, segmented into short-term and long-term phases. Findings The lobby renovation significantly improved guest satisfaction and short-term financial performance. The sentiment analysis showed overwhelmingly positive post-renovation guest feedback. Financial indicators such as ADR and RevPAR also increased significantly. However, over time, the benefits declined. A U-shaped relationship was observed between guest satisfaction and financial performance, indicating diminishing returns as guests adapted to the renovated environment. Originality/value This study extends Servicescape, hedonic adaptation, and adaptation-level theories within the hospitality renovation context and provides insights into the non-linear dynamics between guest satisfaction and financial outcomes. It emphasizes the strategic importance of continuous improvement beyond initial renovations and offers valuable implications for hoteliers seeking sustainable performance gains.