Designers, suppliers find bright spots amid COVID-19 downturn
As the COVID-19 coronavirus pandemic wreaks havoc on a wide variety of businesses, hospitality designers and suppliers are adjusting to new normals.
Delays and Opportunities
“This will be a problem in the sense of delaying everything,” said Fred Salati, director of heated towel rack supplier Amba. “A lot of companies that supply to the hotel industry want to present their products to people ... and they won't be able to right now because everything is postponed. Everything.” Trade shows where he had planned to present his products have been canceled or delayed, and suppliers are seeking other ways to connect with designers and hoteliers. “I was preparing for [the NEWH] trade show to take place in Bethesda, [Md.,] which is right near Marriott,” he recalled. “I was going to have a giant tower full of heated towel rails racks on it. And we're not going to make them now. We're going to wait because it's been postponed until July.”
But if events and meetings are being delayed, some projects have picked up the pace to take advantage of a unique situation. “While its true some projects have been pushed back, we are seeing a few properties moving up their installation of new televisions in order to take advantage of low occupancy,” said Jim Krawczyk, national accounts manager at Apex Hotel Source. "This greatly limits guest disruption.”
Alan Benjamin, founder of Boulder, Colo.-based purchasing firm Benjamin West, agreed. “It's one of the best times in the world to renovate,” he said. “You have less displacement of revenue because you have [fewer] guests there. You can take an extra buffer floor out—in terms of noise or dust or anything else— so that your guest satisfaction scores don't go down as much when you're keeping the hotel open while you're renovating. And generally speaking, things are certainly not getting more expensive. They're either staying the same or getting a little bit less expensive in a downshifting economy.”
Scott Rosenberg, president of Rockville, Md.-based architecture, interior design and project management firm Jonathan Nehmer + Associates, has seen smaller design projects postponed, but not canceled entirely. “If somebody just needs a club lounge or something like that, they'll put that off for two months,” he said. Designers and hoteliers can use this time to work on the bigger projects, however, especially if hotels have closed due to low occupancy. Between 10 and 15 percent of his companys projects have slowed down, he estimated. “The rest are still going.”
Being able to take out more floors of a hotel in order to speed up renovations also means delays in shipping furniture and fixtures isnt as big a hassle as it might normally be because there are more spaces for the contractors to work on while they wait for the delivery. “My thought is still okay, the owners arent losing the rooms,” said Rosenberg of shifting focus from one area to another.
One caveat: Those procurement delays may also drive up project prices, Benjamin cautioned, since so many manufacturing hubs worldwide are affected and since shipping may be limited for a time. To that end, he advised talking with vendors who can problem-solve on the fly and find different materials or sources for various products.
The contractors working on each project, Rosenberg added, are working in smaller crews and are keeping a safe distance from one another. “From what I know, from what I can tell, I dont see anything out of the ordinary. They feel comfortable doing what they're doing.” Project managers are videoconferencing to discuss issues and share photos of each projects progress, and the remote team can share feedback virtually. “It's not the greatest, but we are functioning,” he said of this new normal.
Lemons and Lemonade
The current downturn, Benjamin emphasized, is not a matter of supply outpacing demand, and when the demand returns, that supply can be better than ever. “If the general consensus from the asset-management team and the leadership team is, hey, we're gonna own this hotel for the next five to seven to 10 years, there's no better time to renovate. But in order to do that, you've got to have vision … and you have to have the cash to do it.”
During a conference call with the American Society of Interior Designers, Bernie Markstein, president and chief economist of economic consulting company Markstein Advisors, said the worst thing designers can do during a crisis like this is to not communicate with their partners. “You need help,” he said bluntly. “If you really are in trouble, you want to talk to your clients. See if payments can be accelerated that youre already owed. If you have outstanding invoices, you can talk with your vendors—can you hold off on payment on some items as you struggle through this period?” Talking with a banker is also crucial, he added. “See what kind of forbearance they can provide, maybe even additional loans at a reasonable rate. If you do that, you have a better chance of surviving.”
And while the current situation is certainly worrisome, the epidemic will end and hotels will see business return again. “I think the second half of the year is going to pick up,” Rosenberg said. “I mean, it's not going to be fully picked up. I think it'll take till the middle of next year before we really see it get back.” Hoteliers are still going out and appraising buildings, he added, indicating interest in new purchases and new projects once people are no longer sheltering in place.
Benjamin echoed the sentiment. “The industry always recovers better and faster than anyone can forecast,” he said.