Hotel furnishings, fixtures, and equipment (FF&E) are more than just décor. They’re valuable assets that can meaningfully impact a guest’s visit and a hospitality company’s bottom line.
Whether building a new hotel or refurbishing or renovating an existing space, understanding the complexities of FF&E procurement, warehousing, and installation ensures that you will purchase the items you need to delight guests while keeping your project on time and within budget. If handled correctly, you may even earn a tax write off!
Here’s everything you need to know about procuring hotel furnishings, fixtures, and equipment.
What is Hotel FF&E?
FF&E in the hospitality industry refers to additional assets that are not permanently attached to a building that add value to the space. Unlike structural features, FF&E’s flexibility makes it relatively easy to switch them out as design trends change.
In a hotel, everything from couches, beds, and throw pillows to artwork, lamps, and televisions are considered FF&E. In a restaurant, FF&E includes tables, chairs, bar stools, and storage items.
FF&E as a Business Tax Write Off
Not only does FF&E contribute to the perception of a lodging property, but purchasing it may also result in tax breaks and deductions. The three things that determine the tax value of an FF&E item are:
1. Durability
From a tax perspective, to qualify as FF&E, an item must have a useful life of at least one year, and can reach up to seven years, depending on the quality and purpose of the piece. For example, office products like sticky notes, pens, and paper are commonly used in hotels. However, the Internal Revenue Service (IRS) doesn’t classify these as furniture, fixtures, and equipment for tax purposes because of how quickly they’re used and replaced. By contrast, items like chairs, tables, and video screens are classified as FF&E by the IRS because they are typically used for a year and often much longer.
2. Useful Life
In addition to being in use for at least a year, each FF&E item must have a defined useful life. The useful like determines how long a hospitality company can claim it on its taxes. Furniture, fixtures, and equipment depreciate during their useful lives.
3. Functionality
FF&E must serve a clear and necessary purpose in your business’s day-to-day operations. A hotel can’t host guests without beds. This functionality allows businesses to claim them on company taxes. The standards related to functionality are relatively flexible when it comes to business taxes. Items like artwork may not be a necessary component of a guest stay, but they are typically considered FF&E because they are such a vital component of it.
The FF&E Procurement Process
Typically, lodging companies work with FF&E purchasing firms and (sometimes) logistics companies to purchase, warehouse, deliver, and install items.
A good hospitality FF&E firm starts by taking the time to understand all aspects of the hotel development or rehabilitation project, including style, scale, budget, and timing. Then, they’ll work to source the right items for the lodging company, negotiating for the best possible prices and terms. Either the purchasing firm alone or working with a logistics partner receives, organizes, and warehouses all the items until it’s time to install them.
Because purchasing FF&E items can take months, it’s critical to partner with an FF&E procurement company that isn’t just good at purchasing. They should also be solid at storage, delivery, and installation — or plan to hire a logistics company to ensure your project is completed correctly and efficiently.
As items are delivered, the procurement or logistics provider should check their condition and sort them by stock-keeping units (SKUs). Damaged items should be returned for replacement. One of the parties should develop an FF&E installation schedule that maximizes efficiency and prevents delivery and installation issues and on-site accidents.
How FF&E Impacts the Bottom Line of a Hospitality Business
Every step of the hotel FF&E procurement process presents an opportunity to save money and time while keeping an eye on delivering a delightful guest experience.
In the planning stages, intensive research and careful bookkeeping ensure that the FF&E items you choose will add value to a lodging business while also providing addition perks like long-term tax benefits. Working with an experienced FF&E procurement company like The Stroud Group is critical. Our professionals can help you evaluate all aspects of the hotel furnishings, fixtures, and equipment you’re considering, including cost, style, durability, size, tax implications, and more, to ensure you get the pieces your guests will love that will deliver the best value to the bottom line of your business. Contact us today.