Worcester Business Journal

wbjournal.com | March 18, 2019 | Worcester Business Journal 31 No reservations about hotel growth Be cautiously optimistic about 2019 V I E W P O I N T E D I T O R I A LS I n his story for this issue "Hotels on the rise," News Editor Grant Welker points out hotels in the Worcester metropolitan region have increased their occupancy rates and average price per nightly stay, all while the room inventory has risen by 12 percent since 2014 from a combination of new hotels and expansions, doubling the national rate of growth. Yet, there is concern from industry experts the hotel industry is heading for a slowdown; not necessarily reversing course but delivering much less robust growth. If demand slows, adding more hotels in Central Massachusetts will dilute healthy occupancy rates and could end up having significant negative impact on existing operators. is is a valid concern, but it is weighed against the growing appeal of the region, an increasing numbers of visitors, and the potential for more rooms making the area more competitive for larg- er meetings and conventions. e region, and in particular the city of Worcester, has traditionally had too few hotels, so we need additional growth. A major factor in occupancy rates and pric- ing is the region's ability to attract conferences and large events, such as sports tournaments. e DCU Center in Worcester is an important economic engine as it can host large events, but the arena and its convention center have been historically hurt by the lack of available hotels in near proximity. You can't host a 5,000-attendee, multi-day conference if you don't have a reason- ably close place for all those people to stay. With the DCU Center set to undergo up to $37 million in upgrades in order to remain competitive with T he consensus is the economic outlook still tilts towards positive, with indications the economic re- covery jumpstarted 2009 will continue through 2019. Still, the electrical industry could suffer collateral damage. Tariffs and countermeasures have caused widespread anxiety and pain. e first tariffs pushed up the cost of home construction. e implication is electrical distributors are likely to continue receiving more orders to support current projects, but it may jeopardize future projects. It would be a head-in-the-sand men- tality for electrical contractors not to brace for a bit of a tremor by the time 2020 rolls around. Some steps to take: 1. Know if your markets are heading for a so or hard landing. A so landing would mean building in the residential market will be slowing but not completely stopping. e hard landing would be more like builders not building a single home for 12 months or longer. 2. Beware of linear budgets and make sure you are not in denial. Expenses rise as you're busier, but they will not fall as quickly as you slow down. e biggest expense in any of our budgets is payroll. Don't hold on to people too long when you don't have the work for them. 3. Stay on top of aging receivables. If your customer payments stall, chances are the slowdown domino effect is beginning. Be aggressive in collecting payments. 4. Revisit capital expenditure plans. Be realistic on what can be put off. You may get a better deal in the slowdown. 5. Eliminate unprofitable business segments. Take a look at your customer list to determine who to focus on aligning with during a slowdown and who to stay away from. 6. Use competitive pricing to manage your backlog. is is not the time to try to make a few extra bucks on projects further down the road when you may need the work. Man- age your backlog and bidding process as today's pricing for labor and material may not be the same in 12 months. 7. Avoid committing to long-term expenses. Lock in revenue. Make your money now by thinking short term. Fo- cus on today's projects and profitability. Take the long-term look when deals are more pliable. 8. Go counter-cyclical. Know the cycles of your niche industries or contractor customers. For example, if your biggest customer focuses on facility maintenance when new construction slows, then start working with them now. 9. Evaluate your vendors for financial strength. Review your customers to evaluate who pays you quickest and who is set up with the best structure to endure a slowdown. 10. Cross-train people to prepare for workforce reduc- tion. Make sure you train your staff to not only do their job but the job of the person beside them. 11. Be optimistic; remember this is all temporary. Riches can be made in recessions, if you understand how to navigate the peaks and valleys of the economy. William F. Donahue is president of electrical distributor Crown Supply Co., Inc, with locations in Milford, Webster and Providence, R.I. BY WILLIAM F. DONAHUE Special to the Worcester Business Journal William F. Donahue The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. its New England counterparts, now seems an opportune time to capitalize on developer interest. With Marlborough now having 11 hotels and 1,900 hotel rooms – aer three opened in the last two years – it's clear the region does not lack for demand. Worcester should challenge new hotel develop- ers, especially in the urban core, to be part of the creative economy. A very innovative hotel opera- tor – 21c Hotels – has created a business model of reusing historic properties in the South and Mid- west and turning them into combined hotels and art galleries. With all of the older buildings in our region and the emerging role the creative econo- my is playing in contributing to our momentum, an operator like 21c could thrive in this region. While having more of the large hotel chains fills the bill of adding rooms, we would encourage any new developments to think about creating unique spaces leaving a lasting impression on visitors. e Beechwood Hotel in Worcester, while it does not have a separate gallery, is full of art and creative, local touches. Although details have yet to be revealed, the firm behind the mixed-use devel- opment at the new Worcester Red Sox stadium is describing one of their planned properties as a boutique hotel. is is encouraging. Hotels play an important role in the economy, and the visitors who use them pay a lot in taxes and will spend their money in businesses around the region. While the local hotel industry can't expect the recent growth to continue forever, a prudent expansion of inventory should li all boats. W W WO R D F R O M T H E W E B Tweets of the week "Congrats Meredith Harris (MPA 2014) on recognized as a Women of FIRE by @BankerTradesman and a 40 under 40 by @WBJournal. As Executive Director @MarlboroughEDC, she helped launch a series of small business financial incentive programs" - Public Policy UMB (@publicpolicyumb), March 10, on Marlborough Economic Development Corp.'s Executive Director Meredith Harris "Great to hear the city has finally took necessary action. Eminent domain the only way to rehabilitate in this situation." - shaAJ_REDDICK (@IshaAJ_REDDICK), March 6, on a WBJ story about Worcester officials considering eminent domain actions at the Midtown Mall Facebook feedback "Only have been to Pho Sure, and it is fantastic!" - Domenic Livoli, March 12, on a WBJ story about Small Business Leader of the Year honoree Son Vo's restaurants "What are they doing for electricity? Renewables on the roof?" --Pat Sullivan, March 12, on a WBJ story about Table Talk Pies building a 27,000-square-foot freezer building

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