Corporate purchasing programs have many advocates

Hotel & Motel Management, May 2, 2005 by Stacey Mieyal Higgins

National Report--Hotel operators depend on efficient, economical purchasing programs to keep a property running.

With all of the improvements being made at the corporate level, it's no wonder that general managers and department heads are reporting stellar results from their purchasing programs.

Pat Olejniczak, director of sales and hotel services at the Clarion Collection Kress Inn in De Pere, Wis., spoke highly of the Web-based ChoiceBuys program just days after the hotel's grand reopening as a Choice Hotels International franchise.

"It's saved a lot of time," he said. "We were frantically scrambling to get things done to open."

As a former employee of an independent hotel, Olejniczak saw the benefit of being part of a large franchise with buying power.

"On your own, it's frustrating," he said. "You feel like the little guy. This time, I purchased a sign through Choice and they called to check back on it. They follow up on every step of the process. It's a welcome change--normally you have to call on your own and make sure the supplier is followed up with."

Another new franchisee on the block, Jett Mehta, developed and built several Microtel properties.

Mehta is president and c.e.o. of Pittsford, N.Y.-based Indus Development Co., a real- estate developer. Most of its business is in restaurants, but the company has four Microtel Inns and Suites in New York.

"Putting a lodging establishment together is a long and arduous process," he said. "But if we're speaking of a franchise concept, a national account program is without a doubt the way to approach it."

Microtel's parent company, US Franchise Systems, has a franchise services program that provided Mehta with furniture, fixtures and equipment support during the development process.

"There are two things important about a franchise," he said. "You have everybody within the system putting money toward advertising and you have a strong national account program with volume purchasing."

During the planning phase, USFS provided Mehta with four color schemes to choose from, which included regional, traditional and modern color palettes.

After he chose the modern, transitional theme, Mehta got a list of vendors for property- management systems, carpet and other FF&E.

In the instances that he didn't use a national account program--about 5 percent of the time--it was because he could get a comparable product with a local vendor and save on shipping costs, Mehta said. But he prefers working with a national accounts program.

"When I built my first property in 2000--wow--I would've been lost if I did not have a list of vendors to get these supplies from," he said. "Building other pieces of real-estate are easier because you have the tenant going in and doing it."

Arthur Holst, regional v.p. of operations for InterContinental Hotels Group and g.m. of the 493-room Holiday Inn-Atlanta Airport North, which is an IHG-managed property, reported that good things are happening since the corporate consolidation of products to leverage pricing.

As overseer of 14 properties in the management group, Holst said beverage costs at his hotel and throughout his region are performing better than last year due to IHG's relationship with Avendra and preferred beverage suppliers. At his property, food and beverage costs overall are down two full percentage points. Beverage costs alone are down four full points from last year.

"With the 'World Class Beverage Program', we're getting better wines by reducing inventory and purchasing in bulk quantity for the midscale group," he said. "We used to carry tons of wine ... we had dozens of wines sitting around. We consolidated to eight or 10 wines based on knowing what the customer will want."

IHG mandates the wine list at its properties because without a mandate, the program "has no teeth," Holst said.

For those who go it alone for purchasing, Olejniczak suggested refreshing price quotes periodically and checking terms of purchasing agreements.

"The cost might be great but you might have to add shipping costs or other markups that happen frequently," he said.

Holst warned against choosing vendors by price alone.

"You have to be careful who you purchase from," he said. "Buy from people who are reputable, who give you the when and the how. If the product is late, I don't care how good the price is."

shiggins@advanstar.com