The Buzz from The Lodging Conference – Trade Tariffs to Hotel Renovation Costs… What Hoteliers Need to Know!

After recently attending The Lodging Conference in Phoenix, Arizona, last week, there was a lot of serious discussion among hoteliers and management about the current trade tariff situation. Many expressed concerns about how the continued increase has already affected projects with delayed schedules, construction project holds, and products unavailable to procurement resources.

It is impacting the purchase of hundreds of thousands of products. Information provided by Bloomberg confirmed effective as of September 24th, there is now a 10% increase on more than $200 billion worth of Chinese goods. China responded with a retaliatory tax on $60 billion worth of U.S. goods.  Another 25% increase will be effective January 1, 2019. The pair of powerhouse economies have already imposed tariffs on $50 billion worth of each other’s imports.  Right now, it is critical for hoteliers to have options and available resources for operations and renovations, wherever possible.

Planning is the key to any successful renovation, bottom-line. However, even with the best planning, that doesn’t mean you won’t encounter the unexpected along the way that could sideline your budget and the renovation schedule such as the current trade tariff situation.

At The Refinishing Touch, we consistently ask hoteliers, asset and procurement managers, and designers to contact us EARLY in their specification process. Why? Because, we can eliminate unnecessary and costly steps with our processes. You see, we really are your partner in profit. For over 40 years, we have been helping hoteliers with our asset management programs. It is our goal to provide affordable and sustainable solutions to our customers every single day. Whether you are facing budget issues or issues with procurement sourcing, we can provide many viable options.

Key areas that should be identified before starting any hotel renovation involve:

Understanding and Defining the Scope of the Project

Knowing the Real Budget and Get Reputable Bids

Planning for Anything Unexpected – Having a Plan B

Implementing the Plan

Building a Great Team

Keeping the Communication Open

Let’s review some of these key areas when starting a renovation!

Understanding and Defining the Scope of the Project: As a hotelier, being faced with an upcoming PIP or hotel rebranding can be very costly. Meeting the required brand standards is important for all areas of the hotel. Your budget determines the scope of the renovation. Understanding your budget guidelines will help provide a more successful renovation project.

Photo Credit: Hotel Saranac Renovation

At a time when the U.S. lodging industry is expecting a record amount of total capital expenditures in 2018 — $7.05 billion versus $6.85 billion in 2017, according to a new report from hotel industry consultant and adjunct professor with the New York University School of Professional Studies Jonathan M. Tisch Center for Hospitality & Tourism, Bjorn Hanson — knowing which hotel amenities offer the most return on investment is invaluable for hoteliers.

Hanson’s report defines capital expenditures as “costs incurred with the purchase and installation of capital assets to maintain and enhance hotels” such as wall covering, carpeting, redesigned lobby spaces, and equipment to increase high-speed Internet capacity.

Rising costs, more generally, related to construction and labor costs, are also why many new hotel developments and brands are increasingly being built on the concepts of offering limited or select services to hotel guests to maximize economic efficiencies.

Knowing the Real Budget and Get Reputable Bids: It is important to obtain multiple bids from reputable contractors with hotel experience. Experienced contractors understand the impact of lost revenue and the urgency in turning around rooms efficiently and quickly.  During a renovation, brands will have specified “refresh” requirements based on a property’s condition, age and current standards. The cost estimates or budget must be identified early on to determine if an acceptable return on investment can be achieved.

The Refinishing Touch on-site refinishing process allows us to return between 10 to 20 rooms back into service the same day! We understand this impacts your revenue and why so many hoteliers have selected us for 41 years in the hospitality industry.

Contractors that are less experienced and not as familiar with hotels tend to fall behind, causing the schedule to slip and loss of additional revenue.  Additionally, it is important to remember when reviewing proposals that the best bid does not always mean the lowest bid. Making sure you confirm exactly what each contractor is offering and that they are quoting the same scope is critical.  

The Refinishing Touch process is not a touch-up. We provide full refinishing of each furniture piece. This provides consistency for meeting the brand standards quality and extends the life of the furniture for a much longer period of time.  Here is an example of the detailed refinishing that you can expect with The Refinishing Touch process.

Photo Credit: The Refinishing Touch; MGM Resorts International: Refinish & Reupholster Casino Chairs.

Building a Great Team: When you are building a great team on a renovation project, it is important that they possess the in-depth knowledge for the lodging industry and the brand. Additionally, craftsmen on your team need to have extensive experience but also work well within the team. Having members with local knowledge from labor to the municipal side of the project is also an added value for the team!

Photo Credit: The Refinishing Touch Team of highly skilled craftsmen

But don’t take our word for it, see what some of our customers are saying about us!

Great Team! Very helpful and does quality work.” – Melinda Bunheirao, GM Hampton Inn & Suites – Savannah Historic District

“Really easy to work with. The Refinishing Crew members are top notch!” – Malcolm Smith, GM, Doubletree Hotel, Irvine, CA.

“The Refinishing Touch was very professional, efficient and they understand how to work within the confines of a hotel operation.” - GM, Hilton Garden, Syracuse NY

Keeping the Communication Open: Consistent communication with your team is critical on any project. Hotel renovations, whether full renovation or a soft goods renovation, can take a few months up to even several years. Having consistent communication eliminates challenges and delays and keeps your team engaged during the renovation process.

Controlling costs and minimizing lost revenue is the key. Before you begin your next hotel renovation project that includes updating your FF&E, give us a call. We can provide you with cost-saving information that will save you tremendous amounts of money just like these customers that selected The Refinishing Touch!

Call us today at 1(800) 523-9448 or email us at [email protected] for an online quote or to schedule your design consultation. You can also schedule a Lunch & Learn Session for your team and sharing more information about our processes with you.  We look forward to providing you with affordable and sustainable solutions for your FF&E Budget.

www.therefinishingtouch.com

RESOURCES:

China cutting import tariffs amid US trade war: Report By Brittany De Lea Published September 20, 2018

Planning a smooth hotel renovation takes foresight by Stephen Siegel, Principal of H-CPM Hospitality Construction Project Management

 How Hotels Need to Balance the Amenities We Want Versus Those We Actually Use Deanna Ting, Skift