At the recent 2019 Hotel Data Conference, Vail Ross, Senior Vice President of Global Business Development and Marketing at STR – Parent Company of Hotel News Now, discussed that although the hotel industry is seeing positive results, the ever presence of slowing performance is here to stay.
Photo Credit: Hotel News Now; Vail Ross, SVP Business Development and Marketing for STR.
“Hotel construction has long been the topic of conversation, she said. June numbers show more than 202,000 rooms in construction in the U.S., a difference of about 9,000 rooms from the previous peak in December 2007. In July, there were more than 205,000 rooms under construction, closing the distance with that peak even more.”
Modern hotel rooms are shrinking in size, but growing in complexity as furniture, fixtures and equipment become more ingrained in a hotel’s construction process.
She stated that approximately 55,000 rooms have opened in 2019 but that represents 494 hotels. In 2014, the industry long-term average of closing was 35,000 rooms a year but has decreased to around 25,000 rooms per year. Year to date, the industry has closed 8,224 rooms. “If you do the math and the latter part of 2019 performs similarly in the amount of rooms that close, it’s going to be under that 25,000.”
In reviewing the period of July 2010 through May 2019, this is the longest stretch where demand outpaced supply. “The two are now growing at the same pace,” Ross stated.
New York City is set to draw a record 67 million visitors this year. But with that incredible number of visitors, The Big Apple is the only top 25 urban market in the U.S. projected to post negative RevPAR numbers next year. Analysts attribute it to classic supply and demand. But RevPAR for all U.S. hotels is expected to grow 1.6 percent over the same period.
“We’ve seen for a while that supply growth has been healthy, but the lack of demand we’re seeing this year will hurt occupancy and then RevPAR,” said Jan Freitag, SVP at STR.
An ADR (Average Daily Rate) of $237 in 2019 compared to national averages of $80-$90 ranges could be pricing travelers out and forcing them to find alternate accommodations.
“The RevPAR trend is clearly worrisome,” said Fred Grapstein, EVP of Vornado Hotels, which runs two legacy hotels in New York City, the Crowne Plaza Times Square and Hotel Pennsylvania in Midtown. “It requires every year more and more creative ways to try to skinny down expenses or raise ancillary fees to offset costs.”
So how can hotels find creative and the most cost-effective ways to reduce their expenses and maximize their ROI? One of the largest components of hotel assets is the guestroom furniture and one of the largest costs is replacing that furniture. Why not consider the sustainable solution of refinishing your guestroom FF&E. The Refinishing Touch® has been providing on-site, sustainable refinishing, re-engineering and reupholstering services for more than 42 years. Mario Insenga, Founder and Principal of the company has been the leader in on-site, environmentally friendly refinishing and set the standard in the hospitality, government and university markets. He is the expert on the refinishing processes for hotel furniture and asset management.
Photo Credit: The Refinishing Touch®
As the trusted and Preferred Supplier of HILTON, Host Hotels and Resorts and many more, The Refinishing Touch® has completed over 7,000 renovation projects nationwide! Just take a look at our completed project list.
“While the positioning of your asset is important, it means nothing if the product is neglected. Many hotel operators are resistant to investing in product improvement plans (PIP) because they siphon capital directly off their bottom line, but these kinds of investments, when done correctly, can be offset by substantial long-term gains. – Dan Welborn, Principal at Gettys Group
There is a return on investment for owners, and positives for you as a brand, for successfully carrying out a PIP. Look at what is best for the owner and the brand, typically those two things align,” – Welborn stated.
In a recent renovation project completed by The Refinishing Touch® for The HILTON Bayfront San Diego, the Cost Benefit Analysis (CBA) demonstrates the tremendous savings that a hotel can experience. For the hotel to purchase new furniture and replace the 5,429 existing pieces including freight, installation and sales tax, the total expense would be $6,358,244.00. However, by making the sustainable, cost-effective decision to refinish these same pieces, the cost incurred was less than 10% of purchasing new casegoods. The hotel experienced a savings of 91%! An incredible amount of money saved that can be reinvested into other areas of the hotel.
Here are some additional examples of hotels that have experienced incredible savings by choosing The Refinishing Touch® for their renovation project!
Photo Credit: The Refinishing Touch®
Your hotel can experience the same incredible and sustainable savings that can be reinvested into other areas of your hotel such as technology upgrades, lighting, security features, HVAC, training for employees and much more.
The Refinishing Touch® can also re-engineer furniture pieces to make them more functional and updated for your guestroom spaces.
Photo Credit: The Refinishing Touch® – Includes Solid Surface Replacement, Re-Engineering, Refinishing with Color-Change, Decorative Hardware Replacement.
Photo Credit: The Refinishing Touch® – Includes Refinishing with Color-Change, Decorative Hardware Replacement.
Photo Credit: The Refinishing Touch® – Includes Solid Surface Addition, Refinishing with Color-Change, Decorative Hardware Replacement.
Photo Credit: The Refinishing Touch® Community of Services
By making the sustainable decision to refinish your FF&E, you are also making a positive impact on the environment, your hotel and community. Hotel Wellness for guests is always top-of-mind but hotel wellness should be considered as important before guests enter the room.
We always encourage designers and project managers to contact us early in the specification process. Design truly is at the heart of sustainability.
Photo Credit: The Refinishing Touch®
In a recent Hotel Management Magazine article, Kip Vreeland, SVP of Full Service Franchising for Marriott International, stated “We have to understand what a room is for, and how brand standards can be pulled through, For example, guests have made it clear that showers are a better use of bathroom space than tubs, and the brand standards have evolved to reflect the new expectation. That is the standard, whether in a Fairfield or a Westin, customers are driving that, rather than Marriott. You find unique ways to activate the space. The whole feel of room should be differentiated. Westin hotels are using lighting in new ways, while Renaissance hotels are putting artwork on the ceilings. We’ve created a cool way to make the room new and exciting. With all these differences and being able to compete with the market for that specific brand, you must have options and flexibility.”
Some hotels have started turning their reception areas into workspaces and that desks within the hotel rooms are disappearing because guests are not staying long enough to use them. Traditional closets are also disappearing because many guests don’t bother to unpack. And the complaint from guests who used the traditional closets stated that they forgot their clothes hanging in the closet and leave without them. So many hotels are now keeping closets as open spaces, no doors, within the room design. Additionally, Minibars are also disappearing because most people do not want to pay high prices and would rather go to the hotel bar or bring their own back to the room.
These are the drivers that steer the brand standards to change. Of course, not every hotel is eliminating the desks, mini bars and closets. Upperscale, Luxury hotels continue to include these with their design.
As Greg O’Stean, CDO of Interstate Hotels and Resorts states, “You have to be better not just bigger.”
“You have to build in the necessary time to allow that type of planning to occur. If you don’t plan appropriately you may miss a window, and that’s costlier than trying to rush things than going through an appropriate process.” – Michael Doyle, Managing Director and EVP at CHMWarnick
When you decide to refinish your casegoods, you reduce your carbon footprint dramatically. See how much a 100-room hotel reduces their carbon footprint when choosing refinishing. To find more ideas about how your hotel can add sustainability back into your hotel, check out our Go Green-Hotel Green Ideas Resource Guide!
Photo Credit: The Refinishing Touch®
Hoteliers, if you are looking for design options to help your hotel stand out as well as flexible ways to minimize costs and maximize your hotel ROI, look no further than your guestroom furniture! It is the largest component in your asset management and a great place to start when reducing expenditures. Call The Refinishing Touch® experts today at 1.800.523.9448 to learn about all of your options for saving and adding sustainability back into your hotel. We provide on-site refinishing, re-engineering and reupholstering, solid surface replacement and decorative hardware. Contact Erek Schwartz, Sales Manager to discuss your project and email him at [email protected] to request your online quote! We invite you to visit www.therefinishingtouch.com to learn more about our community of services.
RESOURCES:
Hotel Construction Continues Despite Costly Resources, Limited Labor by Elliott Mest
Slowing Down: US Hotel Performance Losing Steam by Bryan Wroten, Hotel News Now
CBRE Hotels Americas Research Hotels Horizon Forecast
Carbonfootprint.com
Hotel Management Magazine
JN+A HVS Design Cost Estimating Guide 2019