WHAT IS HOSPITALITY PROCUREMENT?

 

“Hospitality Procurement”. What does that mean? If you work in the hotel industry, you probably know the true definition. You likely know that it is very different than “purchasing”. If you don’t work in hospitality, you might think it means to sell hotels, buy hotels, etc.  It’s a term that usually requires some definition in conversations.

“Procurement” is to strategically plan, negotiate, source, contract for goods/services, and manage client services based on several factors.  Many considerations for how a company procures for its business is based on leveraging the total amount of spend on a monthly, quarterly or annual basis, the locations of where the products will be delivered, the brand specification of the items and the stock availability and much more.

Jill Rigsbee, a 30+ year hospitality veteran explains,

“Hospitality Procurement isn’t just about creating purchase orders and placing orders. It’s developing or following product or service specifications and company guidelines based on leveraged buying. It’s a process designed to allow the hotel to concentrate on the guest side of hotel management, while they save money and ensure they have quality items and top-rated customer services.”

Here are three things you can do to start considering your hospitality procurement strategy:

1. UNDERSTAND YOUR CURRENT STATE

It’s critical to understand where you are in purchasing, to know where you want to end up. Often times when hotels analyze their current and past buying habits, they find that they are not leveraging themselves to create buying power for themselves. For example, a hotel may be using three different master food distributors in an attempt to get the best price for various products. Most often, favorable pricing will come from leveraging buying power by aligning the hotel with one food provider.

If a hotel management company has several hotels and different brands, carefully analyzing the products utilized in each property may yield eye opening results. The outcome of analysis may show that the hotels are all over the place with buying various products that are not offering the best savings and specs. You may find that it’s possible to consolidate product and services buying that will allow the company to leverage products to meet all brand specifications.

 

2. CONSIDER A PROCUREMENT COMPANY PARTNER

In a highly competitive hospitality market, it’s wise to consider tapping into leveraged buying with a procurement company. Contracting and managing items for hotels can be complex and procurement service companies only focus is procurement A-Z.

Even large hotel management companies with 100+ properties, who spend $80M per year in goods and services, realize it is wise to tap into the buying power of $5B+ that hospitality procurement companies have in their business model.

One VP of Operations at a large hotel management company said,

“Managing 50+ suppliers at my hotel properties and spending time trying to negotiate hotel-by-hotel takes away from our duties to serve our guests.  We leave procurement to the procurement professionals. 

 

3. COMMUNICATE AND TRAIN

Once you have a procurement strategy in place and a solid vision for moving forward, the key is to develop a training plan that is process-dependent, and not people-dependent. Communication, implementation and consistency in process improvement within the management company and the hotel staff is the key to success.

If you are in a partnership with a hospitality procurement company, a key part of their role is to manage the training program and offer communication tools. However, this is a collaborative effort, hand-in-hand with the key personnel. It always drives success and savings when everyone works together and the communication is strong and consistent from all sides.

 

BOTTOM LINE

Hospitality Procurement, by definition, is the specialty art of understanding what products and services hotels need to meet specs, innovative products, the power of leveraged buying and the how-to to make it all work to drive savings and have happy guests. Contact Jill at jill@idealhospitalitygroup.com or call 984-235-5855 to have a conversation about how you and your hotels can have a winning strategy.