Three years after the Great Recession and with solid hotel industry fundamentals, FF&E projects in the U.S. this year will revolve around renovations.
This is the third article in a four-part series from ISHC member Alan Benjamin of Benjamin West. He and his partners from their global offices will review the topic of "FF&E Project Delivery Around the World" in a series, focusing on the key elements of what it takes to be successful in terms of furniture, fixtures and equipment projects—both renovations and new builds—around the world. Read the first part here and the second part here.
The FF&E process and trends in the United States can be summarized in one word: renovations.
Welcome to 2012, and the year of the renovation! Yes, like an economist who keeps predicting the recovery, if I keep saying this is the year of the renovation, I will eventually be right. This time, however, I do think the planets are in full alignment. We are three years past the September 2008 Great Recession. Currently, the fundamentals of the industry are solid, and the economy, while not in top form, certainly is getting better albeit slowly.
The industry has a great quantity of properties in desperate need of addressing deferred capital expenditure; a leaky roof, failing heating ventilation, air conditioning and refrigeration, and other mechanical electrical plumbing issues cannot wait. And there are some hotels whose interior FF&E can only be described as in "failed" condition. New capital will have to come from somewhere (a topic for another day) and the hotels that are significantly past even a prolonged CapEx cycle have no choice but to get addressed.
Furthermore, all industry data shows that transactions are increasing, and as transactions increase, all the brands will institute a change of ownership property improvement plans. So, whether brand driven, owner driven or simply product driven, we are entering an era of both increased scope and increased overall volume of renovations.
Let's re-examine some of the key high-level fundamentals of the renovation process to achieve maximum success for every CapEx dollar invested:
- Communication. Nothing is more important overall: What is the goal? Who is in charge? What is the reporting process? What are the roles? What is the schedule? What is the budget? Every project, whether a minor lobby renovation, a 90-room 6-star luxury hotel or an entire chain renovation of hundreds of properties must have a clear vision, communicated effectively and to all stakeholders. Also, the owner's representative/project manager must set the communication rules in motion early in the process. Emailing guidelines, setting up conference calls or in-person meetings all contribute to open communication. Another key aspect in overall communication is to hire the interior design firm and purchasing agent at the same time. This is one of the most important steps to ensure the teams are all on the same page and understand the entire history of the project. When that "project history" starts together on the same day, it is a lot easier to have a very efficient, focused and effective interior designer and purchasing agent "interior solutions" team.
- Roles and reporting. While a subset of communication, roles and reporting is certainly worth its own bullet point. Who is responsible for approving scope changes? Schedule changes? Budget changes? Does the interior design firm also approve purchase orders? Who is issuing all FF&E quantities including floor covering and wall covering quantities? Is there a separate lighting consultant communicating directly with the team or only under the main interior design firm? Where does the architect's process stop and the interior designer’s process start? What are the applicable Americans with Disabilities Act codes? Are there any special local fire or life safety codes?
- Scope, budget and schedule: It is still amazing to me how many projects start without a known scope, budget and schedule. It is pertinent that the owner relays all details of the scope of the project to the interior design firm including the budget and schedule. It also is very important that the designers have a full understanding and grasp of the scope before they begin working. The days of "don't tell the interior design firm the budget for fear of stifling the creative process” thankfully are long gone. In addition, it's important for the interior designer to understand the clear scope of everything, such as what the budget number includes and excludes.
- Transparency. Make sure there are no hidden agendas, no conflicts of interest and no conflicting goals. The owner's rep/project manager has to set the goals, and all consultants on the team must work for that owner's goals. It becomes all too clear when there is a team member not aligned with achieving the owner's goals. Note that every stakeholder, if they are indeed acting as the owner's agent as the project manager, interior designer, purchasing agent or logistics firm has a true fiduciary duty to work in the owner's best interest—never their own interest.
- Be the engaged owner. What does this mean? Being an engaged owner means being a strong owner who can manage the team and achieve the common goal, whether it be scope, schedule, budget or all of the above. An engaged owner constantly keeps the team on track while being a positive energy force for the project. Things happen, and renovations can be messy. A good leader will get the best of the team and just like a successful sports coach, will make an overall team win for the owner. The most engaged and passionate owners will get the best results. The project team needs a leader. Some owners are surprised that the purchasing agent will recommend a few project management firms to them before they get started. They say, "But you are asking for me to hire your boss." Well, yes, all stakeholders need a boss to lead the entire time. Someone who understands each consultant's role and responsibilities and keeps all these consultants aligned to achieving the owner's goals. We want to win, and we want to be on the winning team for each owner on each specific project.
In the year of the renovation, now more than ever, we all need to remember to be dedicated consultants working toward each client's goals. We will be tested for speed, for budget and sometimes for sanity, but stay the course and work as a team to achieve the owner's goals.
Alan Benjamin a member of the International Society of Hospitality Consultants, is president and founder of Benjamin West in Boulder, Colorado. Benjamin West is the leading FF&E and OS&E procurement firm in the world, with offices in Boulder, Chicago, Dallas, Hong Kong, London and Miami, with projects in over 20 countries and deploys more than $1.5 million per day as procurement agent for its clients.
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