Small Business Profile: Rearranging Furniture

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Small Business Profile: Rearranging Furniture

Company makes room for unwanted or surplus items from hotel industry reselling them to other institutions and consumers looking for bargains.





By DEBORAH BELGUM

Staff Reporter

Donald Fenning has hundreds of bedroom lamps. He also has ice machines, pastel-colored tablecloths, flowery bedspreads, electric safes, push-button telephones, camel-back couches, wooden headboards, tiny TVs, and shelves of expensive china.

Fenning is in the hotel surplus business, a specialized part of the hospitality industry. Three years ago, he started Hotel Surplus Outlet, a company that buys up rooms of furniture that hotels no longer need because they are either updating their d & #233;cor or going out of business.

Recently, the 48-year-old businessman bought 400 dark-wood armoires from the ritzy Sheraton Palace in San Francisco because the hotel’s operators decided that their size just overwhelmed the rooms. So they called Fenning, who arrived with a crew and trucks and transported it all to his warehouse outlet in Vernon, where his company is based.

At the outlet store, the fancy armoires are now selling for $600, at least one third less than what they would fetch at a retail store.

His business is generated from advertisements in trade publications, word of mouth within the hotel industry and a Web site, hotelsurplus.com. He also sends out a semiannual newsletter to 11,000 people interested in finding out what he has in stock.

“He was a great help in liquidating our furniture in a very organized manner during our more recent remodel,” said Mark Tamis, hotel manager of the Four Seasons Hotel Newport Beach, which recently replaced the furniture in 280 of its rooms. “He is reliable and flexible. It is a pretty specialized segment of the industry. I only know of a few people who do it, and he is the only one I’ve found that I would use on my next project.”

Roots in demolition

Fenning’s reliability may come from the experience he had in his previous career. For 25 years, he was president and chief operating officer of Cleveland Wrecking Co., a demolition and salvage company that had been in the family for three generations.

Six years ago, engineering company Dames & Moore acquired the wrecking company. However, Fenning’s family retained the warehouse and outlet store that sits on two acres in Vernon. So Fenning decided to lease back the warehouse from his family and go into business for himself.

He knew something about recycling items, having resold many of the items his family’s company found in the buildings they demolished.

“I love the buying, selling and trading,” said Fenning, sitting inside his warehouse office that has a desk he picked up in one of his salvage operations.

He sometimes comes across overlooked gems, such as a signed painting worth more than $1,000, or dozens of place settings of Villeroy & Bosch china. But generally he deals with more mundane items.

“A hotel may change the color scheme in its banquet facilities and we will end up with 4,000 tablecloths,” Fenning said.

Or a high-end hotel like The Peninsula in Beverly Hills will restock its terrycloth bathrobes and pool towels, selling the items to Hotel Surplus Outlet.

Fenning has bought roomfuls of furniture from Sunset Marquis in Los Angeles, the Vintage Inn in Napa Valley and the Eldorado Hotel in Santa Fe, N.M., among many others. He pays $75 to $350 a room and then turns around and sells the items for $200 to $1,400.

Fenning said that despite the recent downturn in the lodging industry, his business has grown as high-end hotels have been consistently upgrading their communications systems and televisions. This leaves his company with the opportunity to buy up scores of older telephones and medium-sized TVs.

Also, many hotels are discarding their traditional furniture looking to distinguish themselves from others with cleaner, contemporary looks. At the same time, consumers are searching for dark-wood furniture for their homes and they can usually find it in surplus hotel furniture.

About 60 percent of the company’s revenues come from selling its stock to other hotels, nursing homes, group homes and day care centers. The rest comes from bargain-hungry consumers who drop by the Vernon outlet store looking for cheap ways to redecorate their homes.

Discount prices

Such bargains include sofas for $100, love seats for $90, a writing desk for $40, or a 27-inch color TV for $190.

“I had one guy from San Jose who came down here to buy 50 rooms of furniture for low-income apartment units and ended up calling his wife, getting the measurements of his guest bedroom and buying up a roomful of furniture for himself,” Fenning recalled.

The surplus items have ended up furnishing a 50-room hotel in Monterrey, Mexico, a fishing lodge in Alaska and a new hotel in Vladivostok, Russia.

Fenning said one of his keys to success has been keeping his overhead costs to a minimum. He rents his warehouse and storage areas at a below-market rate and keeps his staff at about six employees. When he revs up for a major project, he hires part-time help. Revenues, he said, are growing at about 30 percent a year.

“I think my past contracting experience has helped a lot,” Fenning said. “So have my scavenging and salvaging instincts too.”


PROFILE: Hotel Surplus Outlet

Year Founded: 1999

Core Business: Sale of surplus hotel furniture and goods

Revenues in 2000: $750,000

Revenues in 2001: $1 million

Employees in 2000: 5

Employees in 2001: 6

Goal: Continued growth and expansion in the hotel industry and reselling more goods to consumers outside of the hotel industry.

Driving Force: A reputation of reliability and an instinct for scavenging and salvaging goods and reselling them.

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