Page 94 - 2017 Hotel Cost Estimating Guide

STEADY AS SHE GOES

by Alan Benjamin, ISHC
President of Benjamin West

Many of us are used to boom and bust cycles: the with design and FF&E. Which means that regardless of

20% interest rates of the 1970’s, “Reaganomics” and the cycle, the increase in brands will be a driving force
the Tax Reform Act of 1986, the 1991 Desert Storm/ of FF&E demand. Every hotel room has a bathroom,

Gulf War, the Dotcom bubble of 2000, the terror attacks window, TV and bed. It is with the FF&E and innovation

of 2001, and the Great Recession of 2008. Now that in this area that the new brands, and the reinvention of
we are starting year 9 of the recovery from the 2008 the established brands, is taking shape. As an aside,

recession, what will 2017-2018 bring? After all, don’t I challenge anyone to name all the brands of Marriott,

these cycles only last 8-10 years?
Hilton, Hyatt, IHG and Wyndham. If you get to just 85%
without using their websites, that is amazing.

At the initial industry events of this year, the conversation

regarding both the industry overall and the CapEx For the near term, I believe we will have solid, steady
Cycle has been summed up as “cautious optimism.” growth in the FF&E industry and that is built on very

While some feel the cycle will inevitably time out and strong years for many of the vendors and consultants.

that the tide is already in, others are more optimistic The hotels are going to need the CapEx teams even
that indeed this time may be different and the cycle more as there is increased competition for each guest’s

can extend. At the time of this writing, the stock market dollar. Trip Advisor and other on-line review services

is at an all-time high, interest rates, while increasing, don’t allow any delayed renovations without immediate
are at historic lows. Most hotel owners and operators consequences to the hotel’s rating and inancial

have a back to business approach and are focused performance. As the old Fram Oil Filter advertisement

on continued strong performance. While overall the used to say, “Pay Me Now, or Pay Me More Later.”
industry’s key indicators have stopped growing at an The same thing holds true in the hospitality industry.

increasing rate, most markets have not turned negative Yes there are always changes of ownership, change

and as always, we have to remember the hotel industry of brands and other milestone event related reasons
is a street corner by street corner industry. Even within to renovate. However, proactive owners and operators

a city, there can be substantial differences in sub are renovating before the brand says they have to and

markets located just 20 minutes apart.
before they lose any market share to the new kid on
the block, who is often next door. Everyone likes the

shiny new hotel, and we are fortunate to be handling

many of the new projects being built throughout the
world, but existing hotels have a wonderful opportunity

to retain their market share and overall performance

with the right CapEx plan and an exceptional team in
place. Existing hotels need to focus and execute their

plan with precision with regards to schedule, budget

and timing in order to mitigate displacement of revenue
and maintain their competitive position.

About the Author
Where does all of this put the forecast for 2017 for the

FF&E industry?
Mr. Benjamin is one of the world’s
leading hospitality Furniture, Fixtures and

By deinition, if the hotel industry is not running proitably Equipment (FF&E) experts. Mr. Benjamin
is the third generation of a family that has
and with positive cash low, owners will not be able to
served the interior needs of the hospitality
hire CapEx consultants or pay the vendors. However, industry since 1931. He is president and
look at the tremendous proliferation of brands, all trying founder of Benjamin West, the FF&E and

to differentiate themselves in an already very crowded OS&E purchasing irm currently working
in 38 countries, and based in Boulder, Colorado, with additional
marketplace. In addition to exceptional service, the ofices in Chicago, Dallas, Hong Kong, London, New Delhi, and
primary way hotels differentiate the product itself is
Sao Paulo.

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JN+A and HVS DESIGN | HOTEL COST ESTIMATING GUIDE 2017