Hospitality Design - November 2011 - 71

trends: purchasing

perspectives
By Stacy Shoemaker Rauen

point of purchase
As the liaison between designers/architects, owners, and vendors, purchasers have their pulse on the industry. We checked in with multiple ﬁrms that gave us the inside scoop on the hospitality climate, from Band-Aids to ridiculous timeframes.

From top: The lobby of the Palmer House Hilton in Chicago, with purchasing by Benjamin West and design by ForrestPerkins; the guestroom at the InterContinental Miami, with procurement by Neil Locke & Associates and design by the Strategic Hotels & Resorts design department.
The reasons? Money is ﬁnally available and owners want to get the work done as soon as possible, or hotels are getting new proprietors who want to make changes quickly. “They have been waiting for such a long time for the money, they want to hurry up and spend it in case something else happens,” says Ted Carroll, president of the Carroll Adams Group in Orlando, who mentions that timeshares continue to be a strong earner for his ﬁrm. But the Catch-22 is that manufacturers aren’t stocking up on raw materials and product due to the fragile economy, and they have cut staff. “When the economy hit the skids, we thought lead times would get better but in fact they more often than not got worse as companies decrease their workforce,” Parker says. Not surprisingly, owners also want the most bang for their buck. “Everyone is looking at every nickel, now more so than ever. No one hires a purchasing company to pay more,” says Benjamin, adding that it is essential to consider the cost over the life of the product, not just today’s spreadsheet cost. “They want the lowest cost for the expected product life.” That’s true for stateside and international projects. “The trick in the Middle East is that everything is 5-Star except for the budget,” says Carroll. One solution, Shulman notes, is ﬁnding alternative ways to save. “We have been doing more evaluation work, seeing if we can save on general conditions with the contractor, doing some buyout on plumbing, doors, and appliances. We are expanding the envelope to ﬁnd where there are more potential cost savings.” In some cases, the funds needed may not all be available or new owners don’t want to decrease their revenue stream by taking all of their rooms off the market. As a result, many hotels are phasing out renovations, which is not always cost effective. “The price of materials will change and they won’t get quantity breaks,” explains Shulman. “They will save some upfront, but not in the long-run.” As a result, at the LAX Hilton, with raw material costs “skyrocketing” for carpet, he locked in

On the Rebound
“A supplier of ours recently said, ‘We are literally slammed—the market isn’t creeping back, it’s surging back,’” says Neil Locke, founder of Itasca, Illinois-based Neil Locke & Associates. Some aren’t as optimistic, but the resounding consensus is that the market is picking up, with renovations seeing the biggest spike. Brands are putting heat on owners to bring their hotels up to standards, and at the same time, many hotels are changing hands. “Typically, hotels are on a ﬁve-toseven-year softgood, and an eight-to-10-year hardgood cycle, and a lot of hotels are offcycle,” explains Alan Benjamin, president of Lafayette, Colorado-based Benjamin West. “They went through the minimum renovation without being in the red zone by the brand.” Adds David Shulman, principal of Project Dynamics in Calabasas, California: “They put a Band-Aid on the work that needed to be done and now ﬂags are pushing hard. We are starting to see some infusion of cash and CapEx monies beginning to be spent.” Another factor for the redos: as occupancy rates and business travel continue to increase, hotels need to renovate to stay competitive— old carpet mixed with new drapes isn’t going to cut it. “You have to have a better product in a soft market to compete,” Benjamin says. “The guest is so much more sophisticated. You can’t fool them. It’s like test-driving a car with 280,000 miles on it. You don’t want it just because it is cheaper.” But just because purchasers are seeing more bids (some as often as one a day), it doesn’t mean the projects are starting tomorrow. “The time from RFP to contract has deﬁnitely become longer,” says Mitch Parker, partner of the Parker Company in Miami.

Taking the Lead
Any change in the market comes with its difﬁculties. “The challenges are lead times, and continue to be lead times,” says Locke. That, coupled with shorter timelines and tighter budgets, appears to be the new normal— and no one thinks that is changing anytime soon.

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November 2011

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Table of Contents for the Digital Edition of Hospitality Design - November 2011