Sourcing FF&E: Domestic vs. Imported - What You Need To Know
Depending on the hotel brand or type, hoteliers often have a choice as to which manufacturers they want to produce their furniture, fixtures, and equipment. The large majority of hotel furnishings are build-to-order, not finished SKUs sitting on a store or warehouse shelf. Therefore, hotel owners must actively select who will construct their products.
Many times, an FF&E procurement provider is helping a hotelier choose between two quality vendors, but one supplier happens to be in Asia and the other is located here in the United States. A variety of factors can influence this thought process. Moreover, some of the dynamics involved have changed over the last year. Every hotel furnishings projects is different, but below are a few important variables hotel owners and FF&E purchasers will want to consider in making this decision:
Product & Pricing
In prior years, many considered the craftsmanship and quality of foreign-made case goods of a higher caliber than what you could buy from stateside producers. However, manufacturing in the US has advanced, gaining ground over the last decade, so any perceived gap that did exist has narrowed.
Due primarily to lower labor expenses, product built overseas has enjoyed a reputation for being more competitively priced than comparable American-made furniture. This may still be true in most cases, but as we will discuss below, there is more that goes into the total purchase price than just the product.
Freight & Tariffs
When buying imported FF&E, hoteliers will bear the significant cost of sea freight, administrative landing fees, transfers, and ground transportation to get product to its US destination. Moreover, ocean rates for shipping from China have steadily increased the past few months to well above 2019 levels. In contrast, American manufacturers typically load finished goods from their FOB point onto trucks for a much shorter, less expensive journey.
Another cost that can greatly add to the total purchase price of FF&E is the tariff due when buying Chinese. On many goods from China, a customs charge of between 10% and 30% of the product cost is due as an import tariff. Although some raw materials used by US manufacturers are subject to tariff, those costs are less common and included in the price of the product instead of added separately.
Shipping & Timing
American FF&E suppliers enjoy relatively short transit times of usually two to five days from when goods leave their docks on a truck. In contrast, sea freight shipments from China to the US often take 30 to 40 days to arrive at their destinations. When port congestion occurs, as it has recently across numerous US ports of entry, transit time rises further.
One other consideration concerns lead times for replacements in the case of damages to delivered goods. When sourcing from a manufacturer overseas, the long ocean freight journey extends the time to deliver replacement items, unless a hotelier chooses to pay more for expedited air freight. In contrast, US producers have the ability to build and deliver product on a truck in a much shorter time frame.
Trade-Offs
The total purchase amount of foreign-made items can easily end up higher than that of US-built FF&E by the time goods, freight, and potential tariff pricing are all calculated. US product is also more likely to arrive at the hotel owner’s property weeks earlier. Furthermore, waiting on replacements for damaged items can take hotel guest rooms out of service and impact revenues for a more extended time frame.
Each situation is different, and there may not be a clear answer to the question about whether to buy foreign or domestic. However, with the help of a knowledgeable FF&E procurement provider such as Innvision, you can make a fully-informed sourcing decision and take the above factors into consideration. Contact us today to begin a conversation with one of our design and procurement consultants so you can make the right call for your hotel project.
