Strategies for Lodging Operators

A hefty dose of volatility is part of managing procurement for any size lodging operation, a fact reflected in Hotel Management’s 2024 Pulse of Procurement¹ study.

In the study, hotel general managers, owners, and CEOs cite cost increases and inflation as top procurement challenges, followed by supply chain constraints:

Understanding the effects of inflation and supply chain constraints

Inflation creates increased operating costs for lodging operators including rising prices for labor, utilities, raw materials and more. Supply chain constraints create procurement delays and potential product shortages.

Adapting pricing strategies, finding alternative suppliers, implementing cost-saving measures and strengthening supplier relationships mitigates the impact of inflation. That’s where a lodging-centric Group Purchasing Organization (GPO) like Entegra is critical.

A GPO leverages its collective purchasing power to negotiate better pricing and terms for its lodging operator clients. But beyond helping operators track fluctuating costs on bedding, linens, housekeeping supplies, FF&E and food – the right GPO helps shift purchasing strategies and suppliers – to help maximize profitability amid inflation and supply chain challenges.

“Entegra delivers value and stability to its customers by providing a robust supplier mix to mitigate variable pricing fluctuations and supply chain protections through negotiated supply agreements,” says Jeffrey Simmons, VP of Supply Management, Hospitality, Sodexo. “The rebates, incentives and negotiated prices that Entegra provides are only one part of what we do to protect lodging operators from volatility.”

The role of technology in overcoming inflation and supply chain constraints: Top tech matters

State-of-the-art GPO digital solutions help hotel operators quickly shift purchasing behavior to optimize every decision. Entegra provides the following digital solutions:

• Goal: Real-time savings while you shop
  Digital solution: Entegra Shopping Assistant is an AI-driven browser extension that “layers” over a distributor’s e-store, allowing clients to easily find the best prices on food (whether Entegra-contracted or not) while shopping.
• Goal: One-stop access to all purchasing data
  Digital solution: Entegra PurchasingIQ, Entegra’s recently reengineered client platform, provides robust data-driven insights that help clients make more confident purchasing decisions.
• Goal: Seamlessly manage multiple units
  Digital solution: Monitoring multiple locations to ensure compliance with contracted pricing is made easier with the Entegra PurchasingIQ platform.

Sourcing suppliers and evaluating bids: Two main pain points

The Hotel Management procurement survey also found:

• Requesting and evaluating bids and quotes to be the most difficult procurement activity
• Sourcing suppliers came in as the second most difficult.

The right GPO not only presents the best products and services to lodging operator clients but also handles the back-and-forth negotiations and admin after suppliers are selected.

With over 2,700 supplier partners, hotels groups like Choice and Accor rely on Entegra’s supplier relationship.

“The Entegra supply team, through category management, works with customers as an extension of their procurement department to define specification and quality requirements, enabling supplier selections,” says Simmons. “Ultimately, Entegra leverages its contracting and negotiations expertise and industry knowledge to deliver optimal total cost of ownership.

Contact us to discuss how to proactively manage costs, harness the supply chain, and tap into digital solutions that help get it all done quickly and accurately. Learn more about Entegra’s approach to lodging here.

_{¹Study: Hotel Management’s Pulse of Procurement; an index report that takes a deep dive into procurement trends for the hospitality industry. Results for Q2-2024}