Hospitality & Design Show - May 2014
Our 48 hours in Las Vegas for the HD (hospitality and design) show were exciting and full of upbeat conversations. Most companies are enjoying solid growth as hotels are refurbishing and new construction is heating up. The industry is growing globally, and vendors must increasingly be able to produce goods in Asia, deliver to Dubai, and deal with purchasing agents in London and architects in Toronto. Globalization requires better MIS, logistics support and hand holding.
"We are a low tech - high touch industry," opined one CEO. "We are investing in people that can connect the dots and make things happen."
The HD show remains important, but the Mandalay Bay locale is not the best and boutique regional shows are sapping energy from the crowd. I would expect to see changes in the next few years.
Hot topics this week were:
- Vietnam riots will certainly affect the short term supply chain and may accelerate the Made in America sentiment. We have created a very complicated sourcing system and many hotel chains are seeking a simpler domestic resource.
- The hospitality channel continues to blur, as office/contract and residential players enter the category. Expect to see more of this.
- Casegoods AND upholstery: there are plenty of terrific vendors, but very few that provide a turn-key wood and soft goods package. We expect several wood vendors to enter the upholstery business, and several upholstery resources enter casegoods. This can be accomplished via acquisition or de novo internal expansion.
With solid business in the hospitality channel, and with the above referenced trends, Merger & Acquisition talks are brisk. We expect to see 2-4 meaningful deals this year from strategic and international players. Private equity capital is also abundant.
Earlier this year, we sold a major vendor to the healthcare and hospitality channels, the AKIN/American of Martinsville company in Arkansas . Buyer interest for this deal was brisk, further signaling to all of us that more transactions are on their way.
If we can be of assistance, please contact us for a confidential discussion. And have a great summer!