Home Magazine Features Purchasing Success at Hotels Is Built on Strong Relationships, Not Price
Purchasing Success at Hotels Is Built on Strong Relationships, Not Price
If I'm successful, then they're successful." That's how Paul Gardian, executive director of Brand Operations at Toronto-based Delta Hotels & Resorts, summarizes the guiding notion behind today's buyer-supplier relationship.
It's a point that illustrates a major shift in the dynamic between hotel operators and suppliers: effective relationships are built on partnerships, not price. "In the old days, it was, 'It's a good price, we've signed the deal, now you [the reps] go out and sell it — I have to move on to something else,'" says Gardian. "Today, it's a partnership. Our job is to equally make the program successful."
Mubashar Shahab, executive director and head of Global Procurement at Toronto-based FRHI Hotels & Resorts, has also seen the shift towards building relationships that bring value to both sides. What's driving the movement, he notes, is globalization and today's increasingly competitive and complex marketplace. "The new reality of procurement is focused on the right cost, quality, delivery, flexibility and strategic sourcing," Shahab explains. "All of this creates a greater need to emphasize mutually beneficial collaboration."
Hotel operators and suppliers alike agree that forging strong, long-term relationships is critical to success. But like any relationship, it takes work. "All relationships require effort to maintain, and they must be mutually beneficial and not one-sided," adds Shahab. "Just like any other relationship, one must be open, honest, and willing to share and learn from each other."
Steve Gupta, president and CEO of Markham, Ont.-based Easton's Group of Hotels, says in order for a buyer-supplier relationship to work, both parties have to deliver. "They respect that we are buying the product from them, and we respect that they are our partner and [we do things like] pay them on time," he says. And, while there are basic service requirements that any brand will ask for, successful suppliers go above and beyond the call of duty, he adds. "That's why they earn more business and repeat business."
In many cases, going above and beyond means offering value-added services that address business needs and challenges. "[If suppliers] are just trying to gain an order here and an order there, that doesn't work for the customer, and it doesn't work for the supplier," notes Joe Campisi, national account manager, Hospitality at HD Supply Facilities Maintenance, Canada, based in Concord, Ont. "It doesn't give the customer the best value overall, because there's more than just price."
Rather than simply being order-takers, HD Supply puts a strong emphasis on offering solutions to clients in audits, procurement and more. Sales executives, for example, will do walk-throughs with the GM or head of maintenance at a property and point out what can be improved or do lighting and water audits with the help of its vendors to improve hotel efficiencies.
Another value-added service is HD Supply's Renovation, Brand Conversion, New Build and Project Management team, which acts like a procurement company. The team helps hotels negotiate better pricing for product, orders goods and stores them in warehouses, delivering them as required for a renovation, brand conversion or new build. "[It's important to] go above and beyond just supplying a product and being transactional," says Campisi. "[Hotel operators] can go online and do that — that's easy. But you have to really build a relationship and bring value-added services."
For distribution companies, delivering product is now just table stakes, says Scott Messenger, national account manager, Accommodations, at Mississauga, Ont.-based Unisource Canada Inc., a Veritiv Company. "That is the starting point, but you've got to bring extra services to the table," he explains.
One way Unisource adds value is by providing data to help customers make better purchasing decisions. The company's analytics tools can show hotels how much they order every month, the fill rate and the average order size, among other data. "We then discuss with them how
they can order more efficiently, so maybe their delivery costs go down," says Messenger. "What we're trying to do is not be box movers — which
is a term said about a lot of distributors — but provide [hotels] with data that helps them run their business more efficiently."
Another value-added tool in the company's arsenal is the Green Gauge, which helps hotels track sustainable product purchases to support their LEED (Leadership in Energy & Environmental Design) goals. "We have the capabilities to show them how they can become more green," Messenger says. "That's been the biggest change I've seen in the last few years. [Hotels] are asking 'How can you help us get more green, or how can you help us
buy more smartly?' Our reps truly build a relationship with individual hotels and go to them as an educational resource."
For their part, hotel companies can arm suppliers with the tools and information they need to succeed. Delta, for example, helps suppliers such as Starbucks by engaging local field reps who deal with individual properties. "Once we've awarded the contract, they'll hear directly from corporate office — whether it's a conference call or a webinar — [about] what the goals of the program are and what hurdles they might run into when they're in the field," says Delta's Gardian. "We will be very honest and say, 'Look, when you go out into the field, you may be met with some resistance and these are the reasons why, but this is why we chose you.' So it's helping to prepare them to be successful."
For Delta, it's also important suppliers share the company's values and goals, particularly on the sustainability front. "I want to know more about how [suppliers are] running their business," Gardian notes. "I'm asking them: where does the product come from, and what are some of your sustainability efforts that are happening within your organization?" He believes it's a chain effect, as guests are also seeking more information about certain products from the hotel. For example, if a guest wants to know where Delta buys its coffee, and if there's a fair price in the purchasing, the company needs to deliver an answer. "As much as we are a purchaser, other people are purchasing from us," explains Gardian. "Our customers want us to be more transparent with them, so it goes through the chain."
Doug Rigoni, the Seattle-based EVP and COO of Coast Hotels, says a good, long-term partnership will carry both parties through good times and bad. "When the economy is down, and you need to sharpen your pencils, maybe [suppliers] don't give you a price increase," says Rigoni. "When the economy is up and business is booming, there's compression and everybody needs their product. Well, we have those relationships, so they answer our calls, and they go the extra mile, because they know we're there through thick and thin. By weathering both economic cycles, you can really strengthen your relationship with your suppliers."
While both buyers and suppliers reap the rewards of good relationships, ultimately it's the consumer who benefits. "It all comes down to being able to service our guests," Rigoni adds. "Our guests are better educated, and they are more discerning about high-quality products in the hotel guestrooms and high-quality ingredients in restaurants. They know more and they expect more, and building those long-term relationships [with suppliers] help us to meet those needs."
Written By: Rebecca Harris
buyer-supplier relationship
Delta Hotels & Resorts
hotel operators
Paul Gardian
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