Why is FF & E real estate?

Wardrobuilding

FF&E (Furniture, Fixtures & Equipment) often represents only 10 to 20% of the investment budget. Therefore, attention is usually focused on the remaining 80% during the initial stages (hence Figurz ;), and when selling the building, more attention is given to the proper functioning of systems like HVAC. However, no bed? No hotel! No hotel? No revenue! FF&E plays a key role in the value of a property, as it gives the building its purpose. From investment to resale, it is much more than a depreciable asset.

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1. Operations

Poor-quality furniture means more maintenance. It accounts for one-third of the time spent by the hotel's maintenance team. Multiplied over the years, it results in significant operating costs. Regardless of the agreement between the owner and the operator, one of them will bear the consequences of cutting corners during the investment phase, resulting in higher operating expenses.

2. Resale

Buying a building means buying everything it contains. Well-selected FF&E, after ten years, only requires a fresh coat of paint, re-upholstery, or rewiring instead of replacement. Even if its book value is zero, the materials and craftsmanship that went into its creation retain value. Anticipation allows better valuation. By selecting the right price, supplier, proximity, and quality from the outset, durability is ensured for both the current owner and future buyers.

Conclusion

When buying a car, one considers its resale value, and while the engine doesn’t need the seats to function, nobody would neglect them. For a hotel, it’s the same on a larger scale. Poor-quality furniture guarantees failure. Well-designed furniture becomes an asset, a true part of the property’s value.