WHEN KARISSA BELLE VISITED

New York on vacation last fall, she lived like a queen. She slept soundly on a thick pillowtop mattress covered in 300-thread-count sheets and was woken by an alarm clock that could be hooked up to an iPod. She strolled around the room clad in an extra-heavy terry-cloth robe, and when she got bored with the skyline, she watched TV and surfed the Web on the room's 42-inch plasma television. All of which wasn't too shabby for a Hilton, especially one of the chain's biggest convention hotels. "It certainly didn't feel like a business hotel," Belle says.

Welcome to "Extreme Makeover," hotel edition. It's not just homeowners who have gotten the remodeling bug. Thanks to a resurgence in travel, an ultracompetitive marketplace and a subtle yet important demographic shift toward a younger customer base, the hotel business is giving itself an unprecedented facelift. In 2005, U.S. hotels spent $4.8 billion in upgrades, according to PricewaterhouseCoopers, up 50 percent from 2003 and the biggest single-year investment in a decade. Hotels are pouring this cash into everything from new beds and new furniture to, in some cases, entirely new floor plans. Out: musty carpeting. In: spa-style showers and iPods. Indeed, chains from Hyatt to Hilton and even Holiday Inn are getting in on the makeover craze, with stylistic redos that would put the cast of Queer Eye for the Straight Guy to shame.

So what will the new traveler find? At Hyatt, 32-inch or larger flat-panel LCD televisions in all of its rooms. Holiday Inn Express has spent $20 million on bathrooms alone, including 120,000 new Kohler showerheads with three settings. Perhaps one of the biggest shifts is happening at Marriott, which has hired a former Nike strategist in a multibillion-dollar worldwide effort to hipify itself. Among other things, the chain is ditching its wooden TV armoires in favor of desktop LCD TVs and spending some $200 million to replace the dowdy floral bedspreads on its 628,000 beds with white duvets and piles of pillows.

Facelifts are hardly a new concept for the hospitality industry; hotels regularly reserve a percentage of their budget for renovations. But most chains put a freeze on any nonessential upgrades after the lodging-industry crash in the wake of 9/11. What's more, the last big round of renovations in the late '90s focused on infrastructure upgrades like new elevators and better heating systems that were invisible to guests. This latest round, by comparison, is almost entirely cosmetic. And while budget hotels typically refrain from all but necessary renovations, this time around they, too, are getting in on the party. Red Roof Inn, for example, is in the midst of a $200 million upgrade that will include new bathrooms with all-granite countertops.

What's driving this change? By far, the biggest force behind the investment is the resurgence in travel. In the past 14 months, the hotel business has come roaring back after its three-year lull. Occupancy rates are approaching 2000's levels, and with revenue this year projected to rise 8 percent for the third year in a row, hotels are finally able to invest in upgrades that they delayed during the downturn. At the same time, travelers are becoming increasingly sophisticated. As consumers have poured money into upgrading their own homes, they've come to expect better surroundings when they're on the road. "Everybody now knows what a thread count is," says Ellen O'Neill, a vice president of design for Starwood Hotels & Resorts.

Officials say there's another, larger trend at work: Gen-Xers are fast replacing baby boomers as the industry's largest customer base. Over the past 10 years, the number of nights boomers are spending in hotels has been basically flat, while the number for Gen-Xers has grown 180 percent. At Marriott alone, these travelers, born between 1965 and 1980, will make up the majority of its guests within two years. But they are pickier and less loyal, so hotels have to make more of an effort to woo them. Holiday Inn, in one such attempt, is redesigning its Select chain specifically to appeal to this group. That means everything from sleek, ergonomic furniture to sports bars in each hotel.

But the extreme makeover movement isn't all 300-thread-count linens and spa-style showers. Not surprisingly, hotels are using the visible improvements as a way to justify higher prices. U.S. room rates on average this year are expected to hit a record high of $95 per night, far exceeding 2000's record of $85. At luxury hotels, rates are up 7 percent over last year to an average of $269 per night. The increases mean that in popular cities, getting a room under $200 is often impossible.

Higher nightly rates are just the start. The upgrades have another purpose to get you to spend more time in your room. In addition to the cosmetic improvements, hotels are throwing a host of new services at consumers, from in-room gym equipment to souped-up gadgets, all in the hope of boosting revenue from in-room charges and meals, together currently 40 percent of hotel revenue, according to Smith Travel Research. Marriott's new room, for example, is designed to be a business center, complete with extra outlets and a television that doubles as a PC monitor. And Starwood is hoping that after getting a massage in your spa suite, you might order a healthy room service lunch.

Then there's the simple problem of execution. Getting hip and stylish exactly right is a challenge, and not surprisingly, some of the best-intended efforts have fallen flat. After focus groups weighed in, saying the wood that Omni initially picked for its new "all-suites, all-plasma TV hotel" was light and cheap-looking, the chain went with a darker wood. And while Starwood may have nailed hip with its W chain, some of its other efforts have been off the mark. Recently, the company renovated the lobby area of its Sheraton New York Hotel & Towers to include an upscale-looking, library-themed bar. But Jason Olthoff wasn't impressed. "You wouldn't come here on Saturday night for a cocktail," says the Long Beach, Calif., event producer. He likes the dark woods for an afternoon drink, but some of the furniture, he says, is just off. "That's a tough sell," he says, pointing to a group of red and green plaid club chairs.

Still, for travelers with chain-hotel fatigue, even the misguided efforts are welcome. Last August, when Omar Siddique and his fianc e stayed at the newly renovated Best Western University Tower in Seattle, they were impressed with the hotel's lobby, which had 30-foot ceilings and a modern, stylish interior with a wine bar and cafe. "I was surprised," says Siddique, who generally prefers the W or the ultramodern Loews in Miami Beach. The Best Western, he says, wasn't quite at those levels he would have preferred fluffier towels and better toiletries but "it's pretty darn close."