The macroeconomy, advancing AI solutions and the growing importance of ESG are among some of the primary factors currently impacting the purchasing of product within the lodging industry.
While executives from FF&E and F&B procurement firms, as well as prominent hotel management firms, may differ on what the biggest issues are, they do unanimously acknowledge the need to stay fluid in a rapidly changing environment where margins are tighter than ever.
“The hospitality industry is at a genuine inflection point in how it approaches business buying and the opportunity for transformation has never been greater,” said Christine Carillo, head of travel & hospitality, Amazon Business.
Carillo pointed to three trends specifically, the centralization of procurement into one single organization, buying at scale and the implementation of artificial intelligence.
Meanwhile, from a geopolitical perspective, the recent fluctuations in oil prices “have drawn attention to the impact it has on every part of the supply chain,” said Jeffrey Simmons, vice president, supply management, Sodexo-Entegra.
“The great majority of non-food products—which lodging operators heavily rely on—are manufactured outside the United States and thus subject to the fluctuations of oil markets. This impacts global logistics, pricing, production inputs and outputs, market availability, scarcity and the transition of markets,” noted Simmons.
He added that overall product inflation is not expected to abate anytime soon.
“While today’s inflation is tamer than the 7 percent to 10 percent we were seeing in 2022, the volatility of world events places the cost of goods and products on shaky ground. It’s unlikely that there will be a return to pre-2019 price stability,” said Simmons.
Emille Aboona, co-founder/COO, Q&A Hospitality Services—an interior design and FF&E procurement firm—also acknowledged some of the pricing fluctuations.
“Right now, you have manufacturers that are starting to apply the surcharge again because of the fuel cost. It's unfortunate, but it's common knowledge so it's just a pass-through [to the customer]. There's also nothing you can do about things like tariffs and container costs,” he said, adding that recent pricing for 40-foot containers was more than $4,700.
Eleanor Waddell, vice president, strategic growth & business development, Avendra International, maintained the cost increases extend beyond oil prices and fuel costs.
“We're seeing cost pressure come from two directions right now. The first is around sourcing origins. A significant portion of what hospitality operations rely on, particularly seafood and produce, is imported, and current market dynamics have made pricing less predictable. The second is labor: culinary wages have risen, and the cost of skilled prep work, like butchering and portioning, is meaningful,” she noted.
Suzanne Saunders, SVP, design and construction, HVMG pointed out the pricing windows are shrinking.
“General contractors are increasingly holding pricing for 30 days, after which they reprice in response to raw material costs, which ultimately get passed through to the owner. Similarly, FF&E vendors are less willing to maintain extended pricing validity and are also limiting quotes to 30-day windows,” she noted.
“Inflation has compressed margins meaningfully on consumables, linens and F&B inputs,” added Greg Presnol, executive vice president, operations, Palette Hotels.
Presnol talked about some of the ways the company looks to manage against the cost increases.
“Our mitigation playbook has three parts: consolidating spend through our procurement vendor to unlock group pricing, locking in annual pricing on high-volume SKUs where we can and giving GMs better real-time visibility into cost-per-occupied-room so substitutions happen before month-end, not after,” he said.
Meanwhile, continued uncertainty within the supply chain remains a critical issue for procurement executives.
“Supply chain volatility has always been a challenge in the lodging industry, but the way it’s changing procurement today is unprecedented,” said Simmons. “Coming out of the pandemic, we expected operators to begin increasing spending to keep pace with steadily increasing in-person events, travel and hotel F&B experiences. Instead, we’re seeing procurement teams waiting to spend their money.”
“The pace of change is the central challenge. Supply chain volatility, ingredient availability, shifting sourcing conditions: these things are moving fast and our obligation is to stay ahead of them rather than react. The goal has always been getting the right product, at the right time, at the right cost, but today's environment requires considerably more work to deliver on that consistently,” added Waddell.
“Delays and supply chain bottlenecks remain elevated compared to pre-2020 levels, though they are not as severe as the pandemic-era disruptions. Because hotel FF&E is highly customized and often dependent on overseas manufacturing, there is still ongoing uncertainty around raw material availability and, in some cases, constraints in manufacturing capacity,” noted Saunders.
Of course, a major weapon that purchasing organizations have at their disposal now to manage all of these cost and timing variables is digital procurement, more specifically artificial intelligence.
“AI is redefining procurement in hospitality by shifting it from transactional execution to intelligent orchestration … Deidentified purchasing data lets AI identify patterns across price volatility, seasonal demand and savings opportunities that no single operator could see alone, turning that into practical guidance on what to buy, when and from whom,” said Waddell.
She continued, “At the operational level, AI is embedded directly into the buying process. It guides them toward the right product, vendor, price and quantity across hundreds or thousands of SKUs, while enforcing standards and service levels across locations. When supply conditions change or disruptions emerge, AI can flag the issue early and recommend compliant substitutions before it impacts the guest experience or the kitchen.”
Carillo reinforced the point. “Where I find AI really interesting is in demand forecasting. AI-powered tools can track guest preferences, seasonal patterns and category-level consumption to help teams plan inventory more accurately, stocking up before price increases hit and pulling back before overstock becomes waste. But the goal should never be to automate your buying decisions,” she said.
Nevertheless, she touted the advantages from an operational standpoint. “When supply conditions change or disruptions emerge, AI can flag the issue early and recommend compliant substitutions before it impacts the guest experience or the kitchen,” said Carillo.
“AI has impacted all aspects of procurement: from purchasing to post-purchase analysis. Hotel operators using closed-system AI in their business are simply more efficient and, ultimately, going to be more profitable,” noted Simmons.
Presnol weighed in on its impact from the perspective of hospitality operators.
“We're using it to flag off-contract purchases, suggest lower-cost equivalents at the point of order and draft RFPs and vendor scorecards, work that used to take our corporate team days. It's also making invoice coding and GL mapping far less painful for our accounting team,” he said.
In addition, AI can be used toward enhancing the commitment to ESG or sustainability, which is becoming an increasingly important part of procurement, according to Waddell.
“For hospitality leaders, AI is transforming ESG reporting from a narrative into a competitive differentiator—integrating verifiable operational data with trusted third‑party assessments. As a result, ethical procurement is no longer a trade‑off against cost or service, but a value driver that strengthens brand trust, guest loyalty and long‑term resilience,” she noted.
Carillo, for her part, further emphasized the growing importance of sustainability.
“Although primary drivers continue to be cost optimization and operational efficiency, we're seeing hospitality organizations increasingly incorporate responsible purchasing practices that empower buyers to shop certified local businesses and diverse sellers or purchase products with sustainability certifications,” she concluded.
This article was originally published in the June/July edition of Hotel Management magazine. Subscribe here.