Hospitality Headwinds
BITAC Panel Cites Increased Lead Times, Rising Costs As Key Purchasing & Design Issues
The rising costs of goods, supply chain issues, and increased lead times are among the most noteworthy challenges facing purchasing and design professionals, all of whom have seen an uptick in project activity in recent months.
At the recent BITAC Purchasing & Design East—held at the Hyatt Regency Coconut Point Resort & Spa in Bonita Springs, FL—panelists addressed the aforementioned topics and others during a discussion entitled, “Hospitality Headwinds: Purchasing, Design Execs Identify Key Challenges With Securing Product.”
George Rutledge, vp, purchasing & IT, OTO Development, LLC—a Spartanburg, SC-based owner/operator—cited cost as a key concern.
“Inflation has been ridiculous over the last year-and-a-half. We’re budgeting in many cases projects two or three years ahead of time. Think about those budgets that you set up anticipating that you’ll hit certain marks and now you’re faced with inflation that’s anywhere from 8 to 15 percent, depending on the category. That’s tough, it does change in many cases what you end up buying,” he said.
Rutledge later added, “the other struggle is all those costs are not known when you place the order. Between container costs and freight costs it’s somewhat unpredictable. By the time you get goods you may have spent a good bit more than you anticipated.”
Meanwhile, ongoing supply chain delays continue to make it difficult to get product, according to Jamie Bell, senior designer, Atlanta-based Focus Design Interiors, Inc.
“Our biggest challenge is obviously just getting it to us. It’s a struggle just to track it and find it. Sometimes we have vendors who don’t even know where the product is. It’s a struggle just to get it on site. We have to order stuff so far out now just so we can make sure we have it for clients,” she noted.
Jessie Melson, interior design manager, Monroe, LA-based InterMountain Management—which also own and operates a portfolio of properties—reinforced the point.
“It’s obviously hard getting product right now and the supply chain issues have really affected my team, in particular, because we do so much renovation work. We try to turn renovation work fairly quickly and if you can’t get product quickly you can’t turn those renovations,” she said, adding “freight is a huge factor right now, it’s astronomical.”
While also acknowledging prolonged lead times, Lissette Landestoy—regional senior manager, sales & operations, Caribbean, Central & South America, Hilton Supply Management—pointed to raw materials as a chief concern.
When it comes to furnishings, for example, “sometimes we can have a frame, but the fabric is not available that meets the needs of that designer.” Landestoy also referenced issues like not having all the ingredients needed for a traditional bar of soap and having to “be creative.”
She continued with the brand perspective. “We’ve had to be able to be flexible when it comes to the standards in order to provide the customer what they need in the guestroom. All the range of categories of products have been impacted [by raw materials] one way or another.”
However, while there are challenges associated with getting product from overseas, the panelists noted that turning to domestic partners is no guarantee these days either leaving many to explore international options as well.
“We’ve seen just with domestic production the labor isn’t there. I think everybody overloaded a lot of the domestic manufacturers and now their lead times are so far extended that we’ve had to look overseas again just to get things there on time,” noted Melson.
Bell amplified the point. “You’re looking for someone who’s making it in the U.S., but they’re all still getting pieces from overseas that you don’t necessarily know about. It’s definitely hard to manage that and know what you’re really getting,” she said.
Rutledge further touted some of the advantages of considering overseas options.
“A lot of our partners have diversified and I think that’s important in that you don’t have one single channel for your supply chain. If you can source China, Vietnam, and potentially Latin America, then you have some options. There are risks that come with that, but diversification is important,” said Rutledge.
Landestoy, meanwhile, noted that overseas options were not ideal at this time. “We’re looking at vetting the suppliers locally in some of my countries to see if they do have the infrastructure,” she said.
Despite some of the headwinds, the executives unilaterally agreed that there is plenty of work ahead when it comes new projects.
“We’re seeing a wave of renovations coming. The brands are going to push renovations on to the owners. It’s important to try to get ahead of that curve so you’re not stuck at the tail end waiting for goods; it’s going to be a mad dash, said Rutledge.
Melson agreed.
“We are busier with renovations than we’ve ever been. You can’t get it [product] there fast enough so we’ve even tried to plan further ahead for renovation work; for next year and the year after that. We already have projects in our pipeline so we know that we don’t have 6 months anymore to turn a renovation. We need at least a year or a year-and-a-half to turn a renovation now so that’s what we’re planning…I would say we’re not lacking for work, it has definitely come back full force,” she noted.
Landestoy acknowledged that there would be increased activity as a result of more PIPs [property improvement programs] taking place, among other factors.
“There will definitely be a lot of renovations and we’re seeing a lot of flag changes as well. There are also openings that were supposed to happen in 2019 and 2020 in the pipeline. The next 12-15 months will be hectic,” she concluded.
