Large well-known hotel brands are serious when it comes to their procurement process, selecting the most appropriate suppliers to support their various tiers of service. Both Hilton and Marriott hotels have defined specific criteria for potential suppliers on their websites. Like many hotel companies, they are selective about the products and services they choose based on a commitment to adhere to carefully established brands standards, designed with quality and consistency in mind.
Marriott looks for suppliers that provide excellent service and value-added products that meet or exceed their standard of quality. They also expect competitive pricing and innovative solutions. Hilton shares this focus. Both hotel companies are dedicated to cultural diversity of local communities.
Keeping their promises to guests is important to these brands and it shows throughout their procurement process. They want the best quality in addition to the best choices. Major hotel companies engage in direct negotiation because their volume translates to significant buying power.
Large hotel chains are often staffed to ensure adequate research of products, services and trends. Their purchasing teams are able to verify the quality of the products and the reputation of the companies, with a thorough understanding of the supply chain,
Smaller and mid-sized hotel companies can also benefit from a strategic procurement process. Companies like Source1 Purchasing are arriving with programs that allow operators to access the same strategic solutions…
It starts with a clear understanding of price and cost. Price is not the key evaluator. At Source1, that the importance price plays, as an exchange rate is underscored. Cost is the sum of yield, brand and utilization; cost usually represents the cost of ownership.
This is a big shift and translates into the major difference between buying and purchasing. Buying is an acquisition and purchasing is a study of all the factors of ownership. Buying is just the simple act of acquiring an item, but purchasing has many complex activities to it.
An old adage sums it up simply — amateurs buy often, professionals purchase once.
If you find you and your team are continuously shopping and getting bids, and constantly changing suppliers in an effort to get the lowest price, stop for a moment and consider the long term implication. When you negotiate once, you get a fair price over time and return you attention to your primary business, growing your hotel’s revenue by delighting your customers. What’s important is selecting a quality partner and working with that partner to create a list of products and standards.
Group purchasing organizations can help operators by providing invaluable expertise in the area of protecting brand standards and accessing the best products at the best price. Their service allows you to focus on other areas of your operation. When a smaller operator runs to Costco to buy supplies, they may save $30 on that day. Or they could have spent their time in ways to generate more revenue.
Consider yield — what you do with the product once you’ve attained it. With standards-based purchasing, you get high-quality products and have very consistent performance. That consistent level of quality costs less and gives your customer a familiar, welcome experience.
Best practices in purchasing and procurement are not reserved for the largest hotel companies anymore. Consider the benefits of engaging experts in a solid procurement process while you turn you attention to growing your revenue.