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Selection and Procurement for the Hospitality Industry

Purchasing

ANDREW HALE FEINSTEIN AND JOHN M. STEFANELLI

E i g h t h E d i t i o n

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CHAPTER

Furniture, Fixtures,

and Equipment

27

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YOU SHOULD BE ABLE TO:

• Identify management considerations surrounding the selection and procurement of furniture, fixtures and equipment.

• Outline the general procedures used when purchasing furniture, fixtures, and equipment.

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YOU SHOULD BE ABLE TO (CON.):

• Describe the major selection factors for furniture, fixtures, and equipment.

• Evaluate financing options when purchasing furniture, fixtures, and equipment.

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FFE AS CAPITAL ITEMS

• Capital items are long-life items.• Most capital items are depreciable

assets.• Typically, the cost of many FFE items

cannot be used as tax deductions in the year they were purchased.

• Value is depreciated over a period of years.

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MANAGEMENT CONSIDERATIONS

• Effect future plans might have on the need for FFE

• Obsolescence• Capitalizing an operating expense

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GENERAL PROCEDURES IN FFE PURCHASING

• Is replacement necessary?• Visiting trade shows• Financing and the need to obtain

competitive bids

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THE FFE SPECIFICATION

• Similar in scope to other specifications

• Supplier services are very importantInstructions to biddersGeneral conditionsSpecific conditionsDetailed drawings

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SELECTION FACTORS

• Intended use• Exact name• Lifetime cost• Potential operating savings• Direct purchase• Demonstration models• Equipment programs• Custom FFE• New vs. used

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SELECTION FACTORS (CONT.)

• Versatility• Compactness• Compatibility• Appearance• Brand name• Portability• Ease of cleaning• Ease of maintenance• Degree of automation• Availability of replacement parts

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SELECTION FACTORS (CONT.)

• Supplier services• Employee attitude and skill level• Energy source• Excess capacity• Add-on capabilities• Warranty• Code compliance

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THE PURCHASE OF FFE

• Cash• Installment Credit