A group purchasing organization can help a hotel or hotel company do much more than save money on purchases. From labor solutions to supply chain management, data tools and sustainability resources, a GPO can help hotels overcome challenges, generate more revenue and increase margin. To examine the many ways these organizations can help hoteliers, Hotel Management hosted a roundtable sponsored by Entegra Procurement Services to discuss how GPOs have emerged as business performance partners to hotels thanks to a variety of services.
Bob Habeeb, CEO of Maverick Hotels and Restaurants, said the past year has been “one calamity after another” for hotels, with the labor shortage and macroeconomic issues among the top concerns. “Companies have to be prepared to pivot in the same way we had to pivot for the pandemic,” he said. “We have to be nimble and have a stable footing so we're able to pivot quickly.”
Jeff Porterfield, chief customer officer and SVP of client services at Entegra Procurement Services, pointed out three ways a GPO can help boost a hotel’s profitability. One, the GPO’s size and scale can help secure the best possible price and breadth of coverage. Two, a GPO provides rebates that are based on a property’s spending through contracted vendors. And three, a good GPO can help a hotelier track a property’s key performance indicators by transparently showing SKU-level detail in real time. This lets hoteliers know exactly what they are buying and how they can achieve the best value for the business.
Vigilance and Value
Kayti Ratigan, COO at Liv Hospitality, said her team has several strategies in place to maintain strong margins in the face of both inflation and rising labor costs. “No. 1 is really tracking where those increases are coming [from] and finding out different sourcing options,” she said. Another option is to leverage a GPO. “We work really closely with our GPO to ensure we're getting the best product at the best price,” she said. “At this point, it's managing pennies instead of dollars—just really trying to find any savings we can when we're purchasing.” Habeeb agreed: “Our mantra has been, ‘It's all about vigilance,’ throughout this period—staying on top of what's going on in the marketplace and what's going on in our own four walls.”
From a management standpoint, Habeeb said GPOs keep the decision-making process where it needs to be. “What we have found in the business is [that] when you push that decision process too far out, you're gonna get all kinds of different results for everything from quantity to quality and pricing,” he said. “You're gonna leave yourself vulnerable for people to make decisions because their local salesperson is a funny person who gives them tickets to sporting events.” With a GPO, the management company makes the major decisions, he added. “We're driving the process. We're establishing the quality standards—and the net result is that we have a consistent product for our guests and pricing that we believe is as low … or as proper as you can get.”
Porterfield agreed: “The more time your staff spends on day-to-day procurement, the less time they have to focus on the customers and some of your bigger operational challenges,” he said. “Maximizing your procurement team's ability with a GPO that can show you proven expertise and savings certainly would be a benefit.” A good GPO, Porterfield added, can provide both unit-level procurement data as well as alternatives that can better fit a property or management company’s budget. “Working with a quality GPO means you're able to utilize their reporting tools to control costs, keep track of your purchasing patterns and really search for overall value alternative products for your business.”
Download and watch the Purchasing and Beyond roundtable on demand here.