Hospitality Industry and its Suppliers See Minimal Impact from China Tariffs

Hospitality Industry Sees Minimal Impact from China Tariffs

While recently-imposed U.S. tariffs on certain goods imported from China is causing concern and angst in a host of industries, so far the hospitality industry and some of its suppliers are not setting off the panic buttons just yet. They are still taking a wait-and-see attitude.

Hilton Hotels & Resorts Chief Executive Officer Christopher Nassetta said he is not seeing any impact from trade concerns that the company can measure on patterns of bookings, or on China business on the development and operating side.

"I think things are progressing as they have been and we feel good about the remainder of the year," Nassetta said, following the release of second quarter earnings. "And, as I said, we are pretty darn good about the setup, all things being equal, for next year."

The United States also should be doing all that it can to capture its share of the very desirable inbound Chinese travel market, despite the new tariffs, according to Jonathan Grella, executive vice president of the U.S. Travel Association. While international travelers to the U.S. spend on average more than $4,000 per visit, Chinese visitors spend almost $7,000 per visit.

"We should do more to welcome legitimate travelers to the U.S., which will help reverse the trade balance, bolster competitiveness, and create American jobs," Grella said.

Furniture manufacturer and supplier to the industry, Artone LLC, also said it has few concerns with direct impacts from tariffs, since its products are all manufactured domestically and has very little,, if any, Chinese components or raw materials, according to Ryan Zahm, business development manager for the Jamestown, N.Y.-based company.

"Overall, the cost of building and furnishing new hotels may increase slightly, but it will remain to be seen if this small overall increase will have any cooling effect on new construction in the U.S," Zahm said.

But he did add this point: "It would seem that some domestic manufacturers will benefit and some domestic manufacturers that consume tariffed goods will face losses."

For instance, Winnsboro, S.C.-based Element Electronics, which assembles televisions, made headlines this month (August) when the company announced that it was laying off almost all of its employees -126 people -because of the Trump administration's 25 percent tariffs on Chinese imports.

HX 2018 operations

Ryan Zahm

To combat any issues or concerns that may arise, Zahm offered advice to the hospitality industry.

"Hotels should engage directly and early on with domestic manufactures to work through value engineering solutions to alleviate any budget constraints that may exist," Zahm said. "For example, by substituting a high definition textured laminate in place of a wood veneer, we can bring costs in line with what hotel owners would expect to pay for a Chinese import. The result is a more durable product that still maintains the desired design aesthetic."

In addition, in the hotel furniture industry there are many cost-effective domestic material options available that can give greater durability and longevity - which can result in a lower cost over the lifecycle of the hotel when compared with a Chinese product with a lower initial cost, according to Zahm.

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