It’s no secret: Demand for commercial development is off the charts right now.
At the same time, however, there is a widespread construction labor shortage. Experts estimate one million workers will need to be added over the next two years to keep up with demand.
On top of that, material shortages are forcing developers to work harder to keep projects on-time and on-budget.
Jason Braughton, an extraordinarily successful commercial and hospitality developer in northeast Florida, offered us some tips for hospitality developers dealing with this market:
Work to Understand Your Client’s Situation, and Help them Understand Yours
Hospitality contractors everywhere are struggling to manage a balance between client demand and widespread material shortage.
Jason highlighted the importance of mutual understanding between clients and contractors while simultaneously searching for new vendors or vendors with leftover FF&E:
“We’re doing our absolute best to keep all our clients happy, but we also understand they’re at a loss. It’s no fun when you’re bleeding cash, when you hired a professional contractor that you trusted to take care of everything, but that contractor is dependent on so many other parts and pieces to fall into place.”
“On the legal side, there are statutes that allow for equitable distribution and force majeure for things that fall outside of the control of the contractor, but I don’t think the judges, court system, suppliers, global supply chain managers, contractors, or vendors really know what to do because we’re all serving in an industry that has uncharted waters. So there’s really no answer on what to do, but we are doing the best we can to find new vendors, or vendors with leftover stock, and we find that some owners are happy to make concessions because nobody’s ever been through this before.”
Select Vendors Familiar with Hospitality Projects
In his role as COO at FGC, Inc., Jason manages many types of commercial construction projects.
He shared some key differences between hospitality and other commercial construction projects: “Bob the painter has been my painter for 20+ years and I know I can trust him. If I send Bob the painter, who paints houses every day, into a major hotel chain, he’s not going to know what the specifications are. The paint has to have a certain millage and a certain thickness on the walls to meet the standards for Marriott or Hilton, for example,” Jason noted. “It’s all very standardized across major brands. A lot of the major brands have certified vendors for these projects.”
Jason’s experience with loyalty to vendors is not unique among developers: In May, we spoke with Jim Watson, a custom homebuilder who offered similar advice about loyalty in custom home development.
Jason went on to discuss the need for a process from start to finish to manage hospitality projects: “The first thing we do on a project like that is go to the owner or architect and say ‘please send us the brand standards’, which goes through everything. That is the process on nearly every project with major chains like Hilton or Holiday Inn”.
“We’d then get together a budget, then meet with the owner or architect to get clarity on all questions about what the end product needs to be. After that, we’d negotiate the term with the owner and sign the contract. Once that is complete and we get clearance from the bank to proceed, we go right to work on procuring all our materials, securing all our trades, taking care of trade contracts, and developing a submittal log or submittal form, to build it and ultimately hand the owner the keys.”