A host of challenges—inflation, supply chain issues and the labor shortage—are giving hoteliers headaches even as occupancy rates and revenue improve. During a virtual webinar sponsored by Entegra, a panel of experts discussed how to make the purchasing process smoother and how a group purchasing organization can be a helpful solution.
Moderator Elaine Simon, senior managing editor for Questex Hospitality, the parent company of Hotel Management, started the roundtable by asking the panelists how their businesses were coping with supply chain shortages.
Matt McClelland, EVP of operations at Concord Hospitality, noted “big delays” in anything involving metals, including computer components. Fabrics might take between 20 and 40 weeks to arrive while outdoor pool furniture could take almost a year.
Olivier Gaupin, corporate director of culinary at Benchmark Global Hospitality, said that hoteliers have to be flexible when they run their businesses. “I think COVID has given us the opportunity to reinvent how we run a business, because we've never been in this boat [before].” At the same time, he acknowledged that communication has been a “tremendous challenge” up and down the distribution line, with vendors not getting necessary information from manufacturers. The vendors, then, have to deal with unhappy clients, leading to a snowball effect and stress all around.
The communications issues could be blamed on staffing shortages, said Priscilla Nesbitt, purchasing director for Best Western Hotels & Resorts. Her distributors, she added, have kept in touch, “letting us know market trends—which products are going to be short in the coming weeks and which areas they may not be able to deliver to.” She, in turn, has been able to share that information with the company’s district managers, who can then let the staff at the various hotels know. “Words I never thought I would say [are] ‘You may want to run to Costco to get your muffins because you're not going to get your delivery,’” she said.
Nick Bilotta, SVP of operations at GF Hotels & Resorts, commiserated, sharing an anecdote about a hotel chef having to run to neighboring restaurants to secure ingredients for a wedding reception. Guests might be less satisfied and less sympathetic with a hotel’s challenges simply because business travel has not returned and leisure guests are paying higher rates, he suggested. “The guests' expectations are a lot higher, so when you're not delivering on the F&B that they want or you're not delivering on the toiletries or the amenities that they expect because you're either short-staffed or you're not getting something, it's has a huge impact on the business.”
Brand Standards and Partnerships
As businesses adjust to the supply chain challenges—and as the supply chain gets back on track—everyone will have to wait for back-orders to come through. “People are being sensible about how they do that and working with the suppliers in the right way,” said Paul McArdle, VP of business development and global operations at Entegra. “These products are still being made in the factories in different parts of the world. They're still being shipped—but getting containers [and] making sure you get the slots in the ports are adding to the time[frame].” Brands that are introducing new brand standards at a time when there are difficulties in the supply chain aren’t making the situation any easier, McArdle added.
Nesbitt noted Best Western’s brand standards for terrycloth, linens and other amenities, and acknowledged that these have become more difficult to acquire as the supply chain crisis continues. “We wanted to keep quality the same, and we wanted to watch the pricing as well so that our hotels were not having to pay a lot more for the same product,” she said. “What I've learned a lot through COVID is which of the suppliers are true partners: those who really stepped up their game and came to the table to get us through this.” She never thought she would accept a 30 percent price increase, she added, but her options were limited. “Making sure [we] have good partners in place is the way we have strategized to get us through this.”
McClelland lamented the need to constantly shift strategies in order to keep the customers happy: “To use a racing term, it's lifting and shifting all the time,” he said. Concord, however, has been able to work with the brands to keep things running as smoothly as possible, especially as new hotels open with limited resources. “They're very flexible in lessening the requirements of inventory that you typically have to have available to open a Marriott or Hilton hotel,” he said. In some cases, a lack of certain supplies means that only some of the rooms can be available. “Some of those other rooms are just going to have to sit with no mattress and no sofa, and when we get them we'll fill them in,” he said. “We'll open them up to inventory.”
As a purchasing and advisory company, McArdle said that Entegra is helping its hotel clients by advising them of upcoming shortages in the supply chain at the manufacturer level, at the distribution level or at the regional level. The company also advises its clients on availability of alternate products and helps them adjust their menus as needed. “We developed our local distribution network as well to pick up some of the slack and give that ability locally and regionally,” he added. “We are the biggest customer of our farm distributor and we pride ourselves on having the best supplier relationships in the industry to make sure that our customers receive the best service at all times—but even more so in these difficult times.”