In the prosperous hospitality industry, boutique hoteliers must ensure they are gaining the best deal from suppliers from all corners, but more importantly ensure a balanced and healthy working relationship is in place to drive efficiencies and innovation from both sides. Nigel Crunden, business specialist at Office Depot UK, explains how.
Boutique hotels are currently enjoying record levels of popularity on the back of an improved economic climate and a subsequent jump in profits throughout the entire hotel industry. E-Forecasting and HotStats have recently conducted a set of Hotel Market Profitability Forecasts which show that UK total revenue per available room (TRevPAR) and gross operating profit per available room (GOPPAR) are both expected to rise by the end of the year by 6.5% and 14.4% respectively.
Although it is always important, at times of increased opportunity it is vital to ensure that suppliers are sourced and managed in the most effective way possible. Keeping control of your supply base and managing suppliers is crucial, especially during favourable market conditions. It also provides a long-term blue print for effective operations, making a hotel stand out whatever the economic climate.
Boutique hotels offer an increasing number of ‘extras’, for example spa treatments, excursions and even home cinema experiences. This provides the opportunity to forge close relationships with suppliers that are committed to developing tailored solutions and supporting the long-term growth of hoteliers.
A willingness by suppliers to go beyond a customer’s expectations in this way can only be borne out of a relationship based on a comprehensive understanding of the way in which boutique hotels operate. One key way of triggering this from the outset is to agree a set of key performance indicators (KPIs) with suppliers before signing off any contract. Only those that make clear pledges to achieve over and above the minimum of what is required should make the cut. After all, the main USP of boutique hotels is that they create a bespoke experience, so suppliers should provide a highly customised service in line with this.
This really helps highlight that procurement is not merely a box ticking exercise, but rather a highly strategic aspect of a hotel’s operations that has a direct influence on wider business objectives.
Support as well as supply
There are many ways in which suppliers can be challenged. However, it is fundamental that suppliers match availability with a clear knowledge of what hoteliers need and when, especially if goods or services are seasonal. Hotel owners must, in turn, properly verify that suppliers forward plan their requirements. The ability of suppliers to deliver at the right time directly influences the level of service provided to customers – so getting this right from the outset is essential.
Balancing cost effectiveness with a great relationship
The nature of the sector is such that long-standing relationships are forged with specialised suppliers able to provide the quality goods and services to satisfy customers that are paying a premium. There may be long-standing contracts in place that have not altered for a number of years. However, although this brings benefits in terms of familiarity and a better guarantee of service, it is important not to become complacent and review suppliers on a regular basis to check the prices charged are in line with the market. If required, this is an important basis for challenging suppliers who in turn should be prepared to be flexible in any relationship. The customer can demonstrate they understand the wider landscape in which suppliers operate with regards to comparable prices and service levels – and ensure that suppliers work harder for their business in the process.
Most of the goods and services provided to boutique hotels – everything from food to toiletries, linen and workwear – is of more bespoke nature and higher quality. Despite this, it is important that suppliers strive to be as transparent as possible when it comes to justifying additional or unexpected costs. In a highly competitive space, it is important to be open and where possible, flexible, in order to provide a service that’s valued more highly.
Communication is the key
No matter how longstanding a relationship is with a supplier, regular contact (face-to-face if possible) is a crucial component of making sure the right goods and services are provided at the right time. Although suppliers have a duty to make efforts to understand the dynamics of their boutique hotel customers, buyers need to allocate time to discuss ongoing issues. Crucially, both parties have a responsibility to anticipate potential problems before they arise and address these at source. To enable this, suppliers must be as transparent as possible about their own sources of supply.
In summary, it is vital that suppliers inherently understand the needs of boutique hotels and closely tailor their service to match.
This means anticipating opportunities as well as potential problems, allowing both parties to benefit and increase the likelihood of a longer-lasting relationship. Buyers in the sector owe it to the efficiency of their business operations to ensure that they understand the wider market in terms of demand and cost and ultimately better judge whether their suppliers are falling in line.