Hotel Industry Still Faces Design and Procurement Hurdles
CHICAGO — Supply chain issues and higher costs are seemingly here to stay, but hoteliers and developers are better equipped to handle them with a healthy dose of pre-planning.
Speaking during the 2022 fall conference of the Hospitality Asset Managers Association, Karel Steiner, principal at Ajax Consulting Services, said the only constant for hotel design and procurement since the start of the pandemic has been change.
"The last few years have been challenging with so many things changing and continuing to change," he said during the "Design, Procurement and Project Management Post-COVID-19" session. "I think constant adjustment is required. You need to be nimble to be successful with projects."
He said some of the design changes promised in the early stage of the pandemic are already fading away at hotels.
"During the pandemic, one thing we saw was design had to be white, we had to make sure there are no more pillows," he said. "And I think those things disappeared very quickly after COVID. There's no more talk about how the pillows have to be gone."
Ryan Schommer, director for The Gettys Group, agreed, but said the pandemic-induced focus on wellness and outdoor spaces in design is persistent.
"We all became acutely aware of our own health and well-being and how hospitality plays a big part in that," he said.
Schommer agreed there were several things that seemed like non-negotiables early in the pandemic that have now been dropped from projects due to costs, including high-cost air purification systems and ultraviolet lighting to kill bacteria.
Overall, the same issues that have plagued hotel development and design for the last few years continues to be the thorn in the side for hoteliers, designers and developers alike, with a scarcity of labor and the challenges of the supply chain continuing unabated.
Nicole Oren, principal and chief revenue officer for Bray Whaler, said labor challenges continue to touch "every segment of everybody's business," and that's true of manufacturing, as well. She said the hopes that moving more and more manufacturing from Asia to North America could abate supply chain issues simply haven't materialized.
"We found while touring factories in Mexico and Canada they just cannot compete with a factor in China or Vietnam that has thousands of workers," she said. "There's just no way. Mexico is not as progressed as the Asian factories. It would probably take them 20 years to get up to the effectiveness, the quality, the execution that Asian factories have."
She said that has less to do with the factories themselves, which she added in Canada specifically are outfitted with cutting-edge technology, but the fact they have a fraction of the workforce seen in Asian countries.
That leaves U.S. companies to continue to navigate the difficulty of getting goods from Asian manufacturers, but she said that is not as bad as it once was.
"Freight is still a challenge, but [costs are] going down," Oren said. "Will it ever get to 2019 rates? I don't know."
She said having people who know how to navigate the supply chain issues, and to do things like shop around to different ports to get quotes, is more important than ever.
All of the panelists cautioned hoteliers in the audience to avoid "value engineering" in their projects, which means looking for cheaper alternatives in the 11th hour, in part because of the long wait times to get materials on-site and the costs and difficulty associated with lengthening projects.
"It means there will be another round of samples that have to be produced before we release the project," Steiner said. "I think one thing we have to acknowledge is the costs from 2019 are no longer applicable in 2022. That's over. Contractor prices have gone up. [Furniture, fixtures and equipment] have gone up. Freight is more expensive. I think if there's an adjustment, it has to be made at the beginning of a project."
Schommer agreed that "those conversations have to happen earlier."
"We have to start making decisions as to what is in scope and what is not or start negotiations if it's a branded project to discuss how critical is this feature, moment or whatever those elements are," he said.