What is a procurement strategy for a hotel?
Hotels operate uniquely compared to other hospitality businesses. Offering a combination of guest services of accommodation, dining, event hosting and leisure services under one roof and operating 24/7. For hotels, procurement strategies involve sourcing goods and services for their daily operations, such as linens and toiletries, as well as food and beverages most efficiently and cost-effectively. Strategies for hotels might cover reducing waste, building supplier relationships and securing high-quality items at the most competitive rate.
Check out our seven key strategies for hotel procurement and how they can help optimise your procurement process.
1. Streamline the supply chain
Hotels need to streamline their supply chain to minimise the disruption caused by unexpected disruptions brought about by global events as well as keep tight control on approved suppliers whom you can rely on.
Here are three ways you can streamline the supply chain in your operation:
Stop thinking about it as ‘supplier management’ and start thinking about it as ‘supplier relationships’.
When you focus on building good relationships with suppliers, you’ll be in a stronger position to negotiate mutually beneficial contract terms. You’ll find that most suppliers will be more open to a collaborative, flexible approach when you work closely with them.
Diversify your supply chain
While it’s important to have great relationships with key suppliers, you also need to make sure that you have built robust and diverse supply chains to minimise issues caused by supply chain disruptions.
Centralise your procurement
There are a lot of positives to centralising procurement across departments and sites. One of the key benefits is being able to see all your suppliers in one place, review contracts and make sure they’re all meeting SLAs.
2. Take control of your inventory management
Inefficient inventory management can cost your business a whole lot of money. It’s important to look at the ways to maximise every item in your inventory so nothing is wasted, and guest experience is never compromised.
Here are some tips for taking control of your inventory management:
Reduce waste
Paying for supplies that end up in landfill is clearly a problem and a literal waste of money. Aside from the environmental impact, waste is a huge drain on finances for hospitality businesses. In fact, according to Waste and Resources Strategy for England (WRAP), food waste is costing hospitality businesses in the UK an average of £10,000 per venue per year.
Furthermore, a global study of the impact of food waste reduction in hotels carried out on behalf of Champions 12.3, showed that “The average benefit-cost ratio for food waste reduction was nearly 7:1 over a three-year time frame.” All of this makes it clear that reduction of waste, and in particular food waste, is an important area to invest in.
Implement internal fulfilment processes
When you operate across multiple sites, there’s a good chance that the supplies you need in one hotel are available in another. With a centralised inventory management system, you can easily see stock levels across your business, and implement internal fulfilment processes where appropriate. In addition to reducing waste, this can make a big difference to cash flow.
Forecast Demand
In an ever-changing industry operating within an uncertain economy, it can feel challenging to know what’s going to happen next. Sometimes it may feel as though you need a crystal ball to accurately predict the future, but there are better ways to do demand forecasting for your business.
The more information you have, the better. Look at historical data, compare on-the-books data year on year, and consider what’s happening in your local area. By fully understanding current and upcoming trends, seasonal demand, customer buying habits, occupancy patterns and more, you are better equipped to forecast your needs throughout the year, giving you greater control over stock levels and ordering.
3. Implement cost-saving measures
There are plenty of smart strategies you can employ to ensure you’re keeping costs under control. The key is continuous monitoring and adjusting as needed continually.
Check out three top tips for reducing costs in your hotel procurement processes:
Centralise your purchasing
Centralised purchasing allows economies of scale and allows for more strategic decision-making across your business, ultimately driving down costs.
Reduce maverick spending
Reduce costly maverick spending by limiting purchases to lists of approved suppliers. A vendor catalogue can help make purchasing decisions easier and remove the need for the procurement department to get involved with many routine purchases.
Consider menu engineering
Menu engineering helps you to identify your most popular and most profitable dishes, so that you can make the right buying decisions. Reducing waste, and overall spending, it’s an extremely valuable way to optimise efficiencies in your kitchen.
4. Prioritise the guest experience
Your number one priority should always be offering the best guest experience possible. Whether that’s serving high-quality food and service or offering good value budget breaks – the outcome is the same: happy customers.
Here are some top tips for delivering a top guest experience:
Deliver a consistent experience
Consistent standards across multiple sites, and over time, protect your brand and keep customers coming back. Make sure that you have a list of suppliers who can offer the standard of products your customers are used to, so that you can balance quality control and flexibility.
Prioritise value rather than cost
We’ve talked about cost control, but that can’t be at the expense of the customer experience. When deciding to change suppliers, ensure that you’re not compromising quality.
5. Be more sustainable
Sustainability in hospitality is becoming a higher priority for consumers along with more initiatives being brought in to achieve
As sustainability continues to grow as a priority for the government, it’s also a growing concern for consumers. But more than that, being more sustainable usually means reducing costs for operations – so everyone’s a winner!
Check out these strategies for being more sustainable:
Pledge your commitment to net zero
According to Booking.com’s Sustainable Travel Report, 81% of travellers say that sustainability is important to them when it comes to travel. That’s why it’s so important to actively demonstrate your commitment to sustainability.
UK Hospitality has laid out a roadmap to net zero which can help you to reach your sustainability goals. Their Sustainability Guide is a great place to start.
Know your supply chain
Having access to all the information you need to make informed decisions about suppliers is vital. It’s not just about price and delivery times. Check sustainability accreditations, certifications, and the life cycle of products and packaging when choosing products. Good hospitality purchase-to-pay software will give you access to supplier listings so that you can see everything in one place.
6. Maximise performance
Get the most out of your procurement process and your team with clear objectives and directives so everyone is working off the same page.
Get to grips with performance strategies for procurement with these tips:
Set KPIs
If you want to maximise performance, it’s important to have targets to work towards. Set KPIs for your team, and make sure they’re properly communicated so that everyone knows what they are working to achieve.
Train your staff
We don’t just mean your procurement staff, although it’s very important that they understand expectations and processes and do their jobs correctly. But it’s also important to empower the rest of your team to understand how to use inventory efficiently, and how to identify opportunities to reduce waste in the business.
When it comes to hospitality training & development, there are unique challenges and requirements, so consider using a platform that allows your staff to access the information they need in an easy and accessible manner.
7. Leverage technology
An investment in technology can help you make big changes to your procurement process in a short time, especially if you’re a multi-site operator. In addition to optimising procurement, technology can open up a whole new world of data insight to help you make actionable decisions for your business.
Here’s how technology could pump up your procurement performance:
Centralise procurement
By bringing all of the essential information together in one place, you can gather the insights you need in order to be able to optimise your hotel procurement process, particularly for those businesses operating across multiple sites. With one point of control, you can identify where efficiencies can be found, to improve your operations.
It also allows you to retain control over quality and standards, by ensuring that all sites are only purchasing from approved suppliers.
Automate tasks
Using purchase to pay software, you can automate many accountancy admin tasks, allowing for dynamic order approval, and setting specific spend limits for different roles, departments, or locations.
Integrate your EPOS
Inventory management software integrated with your EPOS System will offer more visibility and control, giving you real-time data to work with.
Optimise profitability in your F&B offering
Menu Engineering Software can give you tighter control of margins, reduce waste, and help with compliance and inventory management.
Ready to tackle procurement problems?
Our sector specialist team is ready to talk you through our purchase to pay, menu management and stock control platform Procure Wizard, delivering full visibility and control over your entire procurement process from a single point of control.
From F&B suppliers to laundry control – we've got you. And with integrated technology, we can help you learn more about your procurement process and identify the key areas for improvement.
Want to learn more? Take a look at our 7-minute demo video.