The procurement and supply chain environment has calmed down compared to the historic disruptions seen during the COVID-19 pandemic, but major challenges and uncertainty remain — particularly related to ongoing tariff disputes.
On the latest episode of the CoStar News Hotels podcast, Alan Benjamin, founder and president of procurement-focused consultancy Benjamin West, said things remain in flux. The Liberation Day wave of tariffs announced by the Trump administration caused a lot of consternation among hoteliers in early April.
"Imagine you're a firm like ours that's doing 200-plus projects at a time, and every client wants their project repriced within 48 hours so they can tell their lender, their boss or whatever 'Hey, this is what it's going to cost now,'" he said.
Unlike consumer goods pricing, which can take months to catch up to the added costs from tariffs, prices change immediately for hotel furniture, fixtures and equipment. And they also can change where across the globe buyers are looking to source.
Although tariffs are ultimately intended to bring more manufacturing to the United States, it simply isn't an option to source everything hotels need domestically, Benjamin said.
"It's unfortunate that I've had clients say, 'Can we just buy 100% made in the USA?' — Not even North America, so leave Canada and Mexico out of it for now — and the answer is no," he said. "Nobody can get you 100% of the contents of a hotel made in the USA."
Even many products billed as such are only assembled in the U.S., with the component parts sourced from around the world, and it will take years for things like lighting to be manufactured at scale domestically.
"Lighting component parts are probably 90% to 95% made specifically in one country, China," he said. "Not Vietnam, not anywhere else in Asia. And you can't just flip a switch and say, 'OK, we're going to start making that in the U.S.'"
For the full interview with Benjamin West's Alan Benjamin, listen to the podcast above.