Allie Belgiovine April 7, 2010
Smart brief #7 Dr. Brian Miller
Title of article: Renovation During A Recession
Source: Hotel Magazine
Date Published: August 31, 2009
Link: http://www.hotelsmag.com/article/361355-Renovations_During_A_Recession.php
Summary:
The article I read this week was about ways to decrease the risk of running into problems with companies your business has contracts with, especially in times of economic recession. There are five main points that Managers should understand to eliminate claims on construction projects. The first one is to establish good internal contracting procedures and controls. A renovation with unclear contracts can cause major financial problems if anything were to go wrong. Secondly, one should review the contracts and make any necessary changes to specifics about their hotel. To protect against liens and claims, managers should also compile the appropriate lien waivers. A lien waver is a document that says the contractor has received the payment and no longer has any right to the property. For protection about FF&E supplier insolvency in delay, hotel managers should immediately receive the delivery of the FF&E by warehousing it to make sure suppliers are accountable for delays in the cost. Lastly it is important that procedures for what to do with defective claims are established.
Reflection:
This article caught my attention because I just had my Administration Shift with Mr. Sullivan and we spoke about this very topic. Because the Marriott is franchised, the managers have to keep up with Marriott standards to keep all the hotels uniform. Marriott wants the Courtyard to renovate all their rooms and the lobby within the next few years however because of the recession, there isn’t enough money to do such a thing. Mr. Sullivan has to make a proposal to Marriott about extending this deadline until business picks up. I understand why wants the uniformity and the renovations but some of the changes they want to make will not go with the Courtyards clientele but there are some things that should not be changed. For example, completely redoing the breakfast area will not fit with the full service breakfast our guests have always enjoyed so much. This article will be helpful to Mr. Sullivan and the rest of the Marriott staff when they are eventually forced to renovate. Following the 5 steps mentioned above will greatly reduce the risk of having problems with the contractual company.
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I agree that it is of vital importance to understand how to effectively manage renovation contracts. I did think the article should have mentioned free legal web sites and stress the importance of a business law class to be truly successful and skilled in contract negotiation. I am not sure how applicable this would be to chain hotels like the Marriott. Most chains have a legal department on retainer and have already pre-approved contractor lists. For these chains a manager will not be involved in a fundamental way with contractors. This article is probably more applicable to small inns, and hotels GM's and owners.
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