HD-Vegas Recap

Last week we attended the annual hospitality show in Las Vegas, known as HD-Vegas, held at the Mandalay Bay Convention Center (concurrent with the Choice Hotels convention in adjacent spaces). This show competes with BDNY (Boutique and Design New York) which is held at the Javits Center in November. Both are important venues for hoteliers and major flags to meet FF&E suppliers. This year HD felt a bit slower, but most exhibitors reported solid growth for Q1 following a choppy 2025. Previous challenges were mostly due to “Liberation Day” tariffs and a corresponding pause in new business activities due to cost uncertainties. However, looking forward, new hotel projects are happening, refurbishments are occurring, and public spaces are being enhanced to attract customers.

Key Topics:

Iran war and gas prices – rising energy costs and geo-political turmoil does not help consumer confidence (and as a result, consumer spending on hotels, travel, etc.) and are hurting profit margins. Many companies are instituting fuel surcharges to offset rising costs. We are monitoring this closely.

Foam prices – due to a fire at one of the Texas chemical companies that supplies key inputs for producing polyurethan foam, most upholstery manufacturers are raising prices (or adding surcharges) to meet these rising costs. Many are on allocation for foam - which is limiting growth.

High end hotels are doing better than the lower-star chains, as the luxury consumer sector still booms around the world. US vendors are expanding their sales reach to meet this international demand (and avoid US tariffs).

Tariffs remain a huge issue and the constant changes in actual rates - plus conflicting guidance on just the interpretation of the rules - is leading to frustration in the C-suite. Most of the people we talked to are urging the President to provide certainty. Many companies are seeking refunds from the US Treasury on past tariff payments, and there is debate on how this will play out. Given the magnitude of the tariff payments already received (some accounts say $166 billion +) many fear that fraud will be rampant. We heard from two executives that refunds are arriving this week for 25% of the approved amount. One friend said he had received $6 million already.

AI – we heard a lot about AI being an important part of companies’ success in product development, administration, quoting, and digital displays. We too are embracing AI, and we encourage all our clients and friends to explore how they can leverage this new technology.

Quote of the Market: “Reshoring of casegoods jobs to the USA is not going to happen – that ship has sailed” suggested a senior executive in the halls.

Stump Observation: We were stunned at the long Starbucks lines when free coffee was offered some one hundred yards down the hall as you entered the exhibition space. Thanks to the show hosts for the hospitality!

M&A Transaction Activity

Despite the choppy times, we are seeing an active M&A market and continue to close deals at a record pace. Hospitality is no exception and the distance from the whiplash of 2025 liberation is now apparent, creating a positive environment for deal activity. We believe the strong players are gaining momentum while many weak companies are deciding to exit. We also see companies focusing on their core operations and divesting non-core businesses.

Some examples:

• As announced several weeks ago, La-Z-Boy is selling its casegoods divisions (Kincaid and American Drew) to Magnussen Home/Banner Home. This transaction was announced on April 21st. We were honored to once again represent LZB (several months ago we also represented LZB in the sale of Kincaid upholstery).
• USA upholstery is surging as hoteliers want non-tariff goods and certainty of price and delivery. Expect to see several transactions in the sector soon.
• Casual furniture continues to show growth with more people wanting to spend time outdoors in elevated settings. There were reportedly thirty-two casual/outdoor exhibitors at this market, many first-time exhibitors. We are active in this sector and expect to see M&A activity in the back half of this year. By the way, we toured the Margaritaville collection (by Hooker Furnishings) in High Point two weeks ago and were very impressed.

Call us if we can be of assistance. And we look forward to visiting many of you in Chicago in June for the Neocon/Design Days show!