Chain Reaction
By Dennis Nessler | December 8, 2021
If you talk to any hotel executive about the challenges the industry faces today supply chain issues will likely be at or near the top of the list. This, of course, is not unique to the lodging industry but rather is a national problem that will likely have a huge impact on this holiday season as well.
To that point, President Biden recently made the issue a top priority by expanding the hours of operations for ports in southern California in an effort to free up some of the gridlock, in addition to other measures taken. However, unfortunately the ports aren’t the only problem when it comes to supply chain. For example, getting trucks, and more specifically drivers, is a huge challenge in many cases. Most insiders acknowledge that there is no easy fix.
But to narrow the focus on hospitality, the inability to get goods in a timely manner can wreak havoc on hotel project timelines and subsequently bottom lines. Not surprisingly, the AH&LA today revealed in a that some 86 percent of hotels surveyed maintain that supply chain issues are having a moderate or significant impact on operations.
Furthermore, some 52% of the more than 500 AH&LA members surveyed say the problem has grown worse over the past three months, and 74% say supply chain issues are having a negative impact on business revenue.
Respondents do not expect the supply chain disruptions to be resolved any time soon, with 46% saying they expect disruptions to last six months to a year and another 36% expecting them to last more than a year.
To reinforce the point, the effects of the supply chain crisis have been well chronicled by various hotel executives at BITAC events within the past two months.
For example, Kevin Ball, vp, purchasing, Affinity Gaming, relayed his experience on a panel during the recent BITAC Casino event in Las Vegas.
“I’m spending a lot of time more on the phone or face to face with my partners and navigating this supply chain together…It seems like all I get now is ‘hey Kev, your container is going to be delayed another week; or the boat is at the dock but it’s just sitting there; or can we go with something else?’” he said.
Meanwhile, during a mid-October BITAC panel entitled “Purchasing & Design Dilemma: Sorting Through Supply Chain Issues,” a trio of executives weighed in on the impact.
“It’s impacting almost every decision that you’re making. Any time you’re picking out who you’re going to talk to about specifications or where you’re going to source it from or where they’re located, you have to now start considering all those things and you’re going to people that you trust,” said Mari Peralez, design manager, Catalina Island Company.
Michael Kaye, principal, Procure By Design, quantified the impact on completing jobs.
“We have to extend timelines right now. Jobs that were scheduled for the summer, components are just getting in right now,” he said.
According to Megan Chinowth, head of interior design, GH2 Architects, “We’re not seeing our project timelines extending at all. So we’re just putting in more time in the project and trying to find alternate solutions,” she noted.
Kaye, meanwhile, did offer some measure of optimism.
“I think by the end of the first quarter we’ll start seeing some changes,” he said, adding that he sees shipping and container costs coming down as well.
Clearly, as the survey above indicates the entire industry is counting on that change.
