Sourcing Hospitality

1 comment June 20th, 2006 David Bush - Iasta

A recent article on SupplyManagement.com entitled “Message in a Bottle” peaked my interest when the second sentence stated that efficient buying can enhance the consumer’s hospitality experience. It’s a well known fact that efficient buying can enhance your product, your company, and your image … but is not stating that it can enhance your hospitality stretching it a bit thin?

I kept reading and the quote attributed to Graham Donald, marketing and business planning director at drinks distributor Matthew Clark which said “In the past, procurement in hospitality was driven very much by the personality of the purchasing manager. Now there seems to be a more considered and focused approach as procurement managers have a better understanding of their market and how to purchase for it” certainly held my attention.

However, it was the quote from Liam Taylor, commercial director of food service technology provider Makella, in the next paragraph which said “Room occupancy was always the most important thing for hotels but now there is a realization that, as the market becomes more competitive, they need to look at new ways of improving their margins while remaining attractive to customers” that assured me that this article might really be on to something.

Hospitality is a diverse industry - covering everything from contract catering in hospitals and schools, to fast food chains, to five star restaurants, to the hotel you stayed in last night. It ranges from budget offerings through 5-star experiences. It’s very complex.

And it is significantly different then the retail sector, which tends to play it safe. Consumer tastes are becoming more adventurous and the hospitality sector is taking on the challenge, introducing new products to their customers in an effort to differentiate themselves from their competitors and remain attractive. For example, market leaders in the restaurant sector drive sales of specialist foods by offering products that introduce a consumer to a new taste experience or different way of eating.

Moreover, in hospitality the success of a brand is based on people’s experience, not necessarily the raw materials or physical quality. The major difference between hotel chains with the same star-rating is not the towels they provide but the ambience they create.

So how does efficient buying enhance your hospitality? Efficient buying keeps your costs low and your margins high, allowing you to invest in more sourcing expertise, which benefits your customers since you are sourcing products that will enhance their experience, which involves understanding what they want - and the more staff you have devoted to understanding what the customer wants, the better your overall offering will be.

The section on technology was very enlightening too. Even though it said that, on average, hospitality companies do not use eSourcing technologies as much as their retail counterparts, it pointed out that there is an increasing understanding that every business needs to keep their margins as low as possible and that hospitality companies are beginning to realize that eSourcing systems can reduce their overheads and give them an edge in a competitive industry.

Liam Taylor of Makella agrees, noting that “The hospitality market needs to look at new ways of making savings while retaining an attractive product so the use of technology is very important. The market has grown increasingly aware that the key to doing this is by developing an attractive marketing process backed up by efficient procurement methods.”

Entry Filed under: General, Technology / SaaS, e-Sourcing Marketplace