A general contractor signs a single contract with a fixed price and one delivery date, and from that point they answer for building works, systems, finishes and coordinating every firm on site. Their fee for this coordination generally runs between 6 and 12% of the works’ value. On a full renovation with systems to redo, that margin pays for itself. On a furniture-only supply, it doesn’t, and folding the furniture into it is the fastest way to pay a markup on work nobody is really coordinating.
The term gets used loosely. Some building firms present themselves as a general contractor because they have three regular subcontractors, and some project management companies don’t own a single mixer and coordinate twenty firms. The difference shows up in the contract, not on the business card, and it helps to have a glossary of hospitality industry terms to hand on the contractual vocabulary of the sector before sitting down at the table.
Contents
What the owner is actually signing
The contract is a works contract. The most common form on hotel jobs is the fixed-sum, turnkey type: a single price for the finished work as described in the drawings, a single date, a single point of contact. Variations don’t arise from quantities, which remain the contractor’s risk, only from changes requested by the client or from documented unforeseen circumstances.
The fixed price, and what’s inside it
The fixed price only holds up as well as the attached drawings do. If the specification is performance-based, meaning it describes the result rather than the products, the choice of materials stays with the contractor and comparing two quotes becomes impossible. A specification saying “porcelain tile flooring, leading brand” leaves a €20-per-square-metre gap; one that states the format, thickness, slip-resistance class, laying method and grout closes the question. The same goes for furniture, where the level of detail in the furniture specification decides whether the fixed price is a price or a promise.
Then there are the items that always vanish from the fixed price and reappear as extras: temporary site connections, scaffolding beyond a certain duration, disposal of unforeseen materials, protection works for areas still in operation, site security. These need naming one by one before signing.
Who controls the site
The site supervisor is appointed by the client, not the contractor, and this is the point where most money gets lost. A site supervisor paid by the contractor, or chosen on their recommendation, signs off records that nobody challenges. The contractor’s objections get entered as formal reservations in the accounting records and need handling right away: a reservation left unresolved by the first progress statement turns into a negotiation at the end of the site, when the property already has an opening date and no bargaining power.
On progress payments, the practical rule is that payment follows the work completed, not the calendar. A deposit at signing of 20-30%, progress statements verified by the site supervisor, a retention of 0.5 to 5% released at final testing, a bank or insurance surety guaranteeing proper completion. Late-delivery penalties should be written as a daily fraction of the contract value, usually between 0.3 and 1 per thousand a day with a cap around 10%: on a hotel that has to open on the first of June, a token penalty is worthless, because the real damage is a lost season.
Who’s answerable for what
The table below is the split that works in practice when the furniture stays outside the main contract, with coordination still assigned to the contractor and paid as a fixed-sum item.
| Area | General contractor | Furniture supplier | Client and site supervision |
|---|---|---|---|
| Structures and building works | full execution and warranty | none | ongoing verification |
| Systems and system certifications | execution, declarations of conformity | flags socket and drain points by a set date | approves the systems drawings |
| Fixed wall furnishings, panelling, counters | prepares straight, plumb walls, chases, reinforcements | design, production, fitting, anchoring | signs off the final survey |
| Movable furniture and accessories | receives, stores, provides floor access | supply, fitting, packaging removal | piece-by-piece testing |
| Timing and sequencing | overall schedule, clean area handover | confirms production and transport dates | signs area handover records |
| Defects and faults | works and systems | furniture, hardware, finishes | written notice within legal deadlines |
| Warranties and insurance | site policy, public liability, post-completion warranty where due | contractual warranty on furniture and spares | checks cover limits and duration |
On warranty it pays to be precise, because it’s the part everyone takes for granted. Italian civil law distinguishes non-conformities and defects, which must be reported within sixty days of discovery with legal action within two years of delivery, from serious defects that compromise the stability or function of the work, covered for ten years with notice required within one year. On furniture the warranty that matters is the contractual one: duration, response times, spare parts availability. Ten years of warranty on a wardrobe‘s structure is worth little if the discontinued hinge can’t be found after three.
When it pays off, and when it’s just a markup
It pays off on a full renovation, where building works, systems, fire safety and finishes are interwoven and someone needs to answer for everyone’s delays. It pays off when there’s a contractual opening date, for example a pre-opening tied to a management contract or an already-running amortisation plan. It pays off when the owner has no technical office and nobody who can be on site twice a week: in that case the 6-12% is the price of work that otherwise wouldn’t get done.
It doesn’t pay off when only the furniture is being replaced, even at significant volumes. Refreshing forty rooms with no structural works involves a single trade, gets organised with a floor-by-floor schedule, and is managed with the supplier doing the fitting, as happens on sites run floor by floor with the property open. It doesn’t pay off below a certain spend threshold, which in practice sits around €300,000 in works: below that figure, coordination costs more than the disorder it prevents. And it doesn’t pay off when the owner already has a trusted designer following the site, because the two roles overlap and responsibilities get passed back and forth.
The most common middle case is a partial renovation, for example bathrooms and systems redone with new furniture. There, the formula that works best is a building and systems contract with the contractor, furniture under a direct contract between owner and supplier, with coordination and area handover assigned to the contractor as a declared fixed-sum item in the quote. It costs a few points less and keeps direct contact between whoever chooses the finishes and whoever produces them, which is where rooms are won or lost.
Where control gets lost
Product equivalences. The phrase “or equivalent” next to every specification item is meant to protect competition, but if the equivalence gets judged mid-works by the same contractor, it becomes a shortcut. The rule to write into the contract is that every equivalence must be proposed in writing with a comparative technical data sheet and approved by site supervision before ordering, and that the price doesn’t change if the substitute product costs less.
Cascading subcontracting. A contractor who subcontracts the plasterboard to a firm that in turn subcontracts the fitting to a piece-work crew produces sites where nobody knows who put up that false ceiling. The countermeasure is a named list of subcontractors attached to the contract and a ban on further subcontracting without written authorisation.
Inflated progress statements. A SAL at 60% with the site at 40% is financing to the firm, and when the firm stops, that money doesn’t come back. It gets checked with on-site measurements, not with photos attached to the invoice.
The last risk is less visible and concerns the rooms. When the furniture supplier becomes a subcontractor of the contractor, they lose their direct relationship with whoever decides, and the questions that should reach the hotelier pass through two filters and come back distorted. The on-site measurement survey gets handed over late, production dates turn out to have already expired when the furniture production time leaves no margin, and the sample room gets skipped to claw back two weeks. Then the furniture bill of quantities reaches the owner already reworked, and it’s no longer clear what got dropped. Anyone who has already worked with a contract furniture supplier chosen directly knows what it’s worth being able to call one person and get an answer the same day; inside a chain of subcontracts, that person still exists, but they no longer answer to whoever is paying.
Frequently asked questions
How much does a general contractor cost for a hotel?
The fee for coordinating and managing the job generally sits between 6 and 12% of the works’ value, with higher percentages on small, complex sites and lower ones above a million euros. Below €300,000 in works, the arrangement rarely pays for itself, because the coordination cost exceeds the value of the disorder it prevents. The percentage should be requested spelled out in the quote, not left buried inside the fixed price.
Does furniture need to be included in the general contractor’s contract?
In most hotel renovations it pays to keep it out, with a direct contract between the owner and the supplier and coordination assigned to the contractor as a fixed-sum item. That way, whoever chooses the finishes speaks directly to whoever produces them, and no markup gets paid on the furniture’s value. Including it in the contract only makes sense on turnkey deals with a single investor and no technical structure on the owner’s side.
Who appoints the site supervisor in a turnkey contract?
The client appoints and pays them, always. A site supervisor recommended or paid by the contractor is checking their own work, signs off progress statements without independent verification, and in the event of a dispute leaves the owner without useful documentation. Their fee, usually between 2 and 4% of the works, is the highest-return spend in the whole operation.
