As implied above, luxury, as a hotel
segment, is not defined by things; rather,
it’s the experience derived through
things and services that defines it. Of
course, saving money on core products,
food items and sustainable amenities can
become even more important, especially
when operators still need to have money
to invest in the experiential component
of their businesses. That’s where a
Procurement Service Provider (PSP)
comes in. As a best practice, luxury
hotel operators are finding that PSPs
are making significant impact on their
bottom lines – especially when it comes
to the purchase of food items.
Key to partnering with a PSP is finding
one that understands the luxury segment
needs to be managed differently. The
supply chain management process
should be tailored to the unique business
strategy of each luxury destination and
purchasing contracts with suppliers
should meet premium product
purchasing demands. The procurement
team can consult with the property to
understand its unique, individual goals
and create a customized action plan
to meet those goals. Then, through
ongoing performance analysis, the PSP
can identify savings opportunities at
the property level. Knowing who to buy
from, what prices to pay and where
to source consistent goods can be a
challenge– even for supply chain experts
– as luxury hotels seek out experiential
differentiation in the market.
Here are two areas having an impact on
the luxury travel experience:
• Locally-sourced food
Luxury travelers want authenticity,
starting with what they eat, leading
to an increased scrutiny on the
origin and procurement of their
food. Finding enough locally-
grown products to meet a hotel or
restaurant’s daily demand – such
as locally raised farm animals for
proteins or cage-free chickens for
eggs – can be difficult, and so can
ensuring locally-raised cattle are
treated humanely. A procurement
service provider brings a unique
22 ILHA
perspective on the challenges
facing luxury operators. From a
sourcing perspective, a hospitality
PSP understands that hoteliers are
often time and resource challenged,
and this can lead to price and
convenience becoming a primary
factor when making a purchase or
selecting a supplier. As a result,
luxury operators can sometimes
find themselves sourcing products
from suppliers who may care very
little about things like food safety,
quality assurance or making sure
that employees are treated fairly.
Finding legitimate suppliers who
meet all government regulations
in general (and F&B suppliers who
meet nationally accredited third-
party quality assurance requirements
specifically) can be a time consuming
and daunting challenge. By leveraging
a team of sourcing experts, luxury
hoteliers can be assured their high
standards are met and maintained
across a variety of programs and
services, reducing risk while also
improving the bottom line.
• Ethical, Sustainable Goods
Over the past few years, luxury hotel
brands have developed corporate
policies to ensure their operators
are sourcing local products and
many are even upping their F&B
specifications to now include more
ethically and sustainably produced
products, such as humanely treated
animals throughout the supply
chain. A reputable PSP should
have a requirement in place for
produce suppliers to have a “local”
offering, and they will make sure its
seafood suppliers carry at least some
sustainably harvested products. We
are also seeing a lot of movement in
sustainable products such as drinking
straws and alternatives to plastic
water bottles. Although hoteliers
are encouraged to switch to reusable
plastics or even paper, it can still be
difficult to find ample suppliers to
meet growing demand. Leveraging a
PSP will ensure that the luxury hotel
is receiving the best prices available
on any and all sustainable goods.
When preferred pricing isn’t possible,
the PSP will consult with supplier
partners and apprise them on luxury
buying trends to better meet demand.
For example, a PSP’s produce supplier
in Los Angeles may be able to leverage
its relationship with grower shippers
to feed the local need. Leveraging
supplier relationships is key to ensuring
affordable pricing to luxury operators.
It’s important to note that a hospitality-
specific PSP will also work closely
with the luxury brand to keep them
informed on market price changes and
can help them shape their sustainability
strategy, while also continually engaging
the market to produce high-quality,
responsibly sourced products that they
can then introduce to luxury guests.
THE FUTURE OF LUXURY
By 2025, the luxury hotel segment
is expected to be worth $116 billion,
according to Grand View Research.
As growth and development of luxury
/ boutique / lifestyle hotels continues,
so does the need for non-cookie-
cutter accommodations and unique
amenities to foster more personalized
and memorable guest experiences.
While differentiation is great, it can
be challenging from a procurement
perspective as the need for a wider array
of unique products and solutions to help
set each brand apart from the other
continually increases. This has impacts
across the supply chain, and it’s more
important than ever before that luxury
hotels look to PSPs for cost-effective
and innovative solutions.
About the author
Shelley Hodges is Senior Director of
Account Management for the Luxury
Segment at Avendra, North America’s
leading hospitality procurement services
provider. Avendra is dedicated to
enhancing the value it brings to luxury,
boutique and independent hotels.