The hotel industry is anything but stagnant.
Emerging technology, shifting economies, and elevated guest expectations have compelled hoteliers to stay ahead of the curve, implementing new solutions and ensuring their properties change with the times. However, modernization is not always equally applied across all areas of hotel operations. Some areas are slower to evolve, and in some cases, this can cost time and money.
For the majority of American hotels in particular, the procurement process hasn’t really changed since the 1990s. That’s 35 years without meaningful improvement!
That said, there are solutions out there for hoteliers looking to take their properties into the modern age. There is no need for procurement to continue to be a manual process — technology has brought it into the 21st century. Now hoteliers just need to recognize when it’s time to use it. Not sure if that applies to you? Here are four signs your hotel’s procurement system needs a refresh.
Costs are a mystery
One of the first signs that a hotel’s procurement process is outdated is a lack of pricing transparency. Knowing how much things cost is an essential part of running a successful business, but hotels that rely on manual procurement processes have to take extra time and effort to ensure their numbers are correct. Pricing assumptions can be based on outdated or incomplete invoices, making it impossible to track key metrics like cost per occupied room, especially for daily services such as breakfast.
There may also be instances of double-billing, missing invoices, or incorrectly logged purchases that aren’t discovered until after a financial close. Hotel employees are human, and humans can make mistakes. Unfortunately, in procurement, untangling those errors can take hours or days, eating up a team’s precious time.
Technology can help minimize cost confusion and human error. By having all vendors in one place, with purchases tracked and prices outlined in black and white, the costs are made clear.
Time lost to manual tasks
More than half of hotels in the United States are still manually inputting invoice data into accounting systems. The next sign your procurement process needs updating is that you’re entering invoices by hand, placing orders across multiple websites, or chasing down paper trails.
Even in the most streamlined of instances, these processes can keep general managers, department heads and other hotel employees tied to a desk for long periods, wasting time that could be better spent focusing on guests, operations or other property necessities. Further, many leaders don’t realize exactly how much time they’re actually losing until it’s mapped out for them.
Automating as much of the procurement process as possible can free up time for managers and departmental leadership to focus on driving revenue, improving service and supporting their teams. Additionally, once processes are automated, hotel leaders can re-engage with their teams and departments, which leads to better morale, stronger operations and improved guest satisfaction scores.
Inventory control discrepancies
Another clear sign of an outdated procurement process is a manually tracked inventory, whether via spreadsheets, printed charts, or pen and paper. Even if your procurement team is fastidious, these methods leave too much room for human error, as well as outdated pricing and inconsistent reporting. Hotels have to assume that costs and counts are accurate, but chances are there are mistakes, which can skew financial reporting, especially in high-value areas like bars or housekeeping supplies. There’s also the danger of using outdated price sheets. Prices can change quickly, especially in the current financial landscape.
Finally, it’s not uncommon to find discrepancies of up to 10% between reported inventory value and what’s actually on hand, leading to financial inaccuracies that could add up to hundreds of thousands of dollars. When hotels switch to a tech-based system with real-time pricing and inventory updates, they get far more accurate numbers and visibility that they didn’t have before.
Not creating opportunities for change
Changing established processes can be difficult. Many hotel teams stick with the same procurement habits for years — not because they’re the best option, but because they’ve always done it that way. The hotels that modernize do so because they consistently look for opportunities for improvement, conducting an internal audit on their processes for inefficiencies and outdated practices that drag down margins. A simple audit can uncover where time is being wasted, where errors are slipping through and where automation could drive improvements.
Audits can be eye-opening. They show, with absolute clarity, how many processes are manual, how long they take to perform and who exactly is responsible for them. Only after the current process is completely understood and documented can a hotelier start building a case for change. Additionally, once you have the full picture, you can see exactly where time and money can be saved by implementing new technology.
A modern property
Procurement may not be the flashiest part of hotel operations, but modernizing this process can have a ripple effect across the entire business. Hotels that modernize procurement free up time, improve accuracy and create more value — not just for the team, but for the owner and the asset itself. Innovation in procurement helps lay the groundwork for ongoing improvements in other departments. It’s the starting point for a hotel’s long-term tech roadmap.
James Hansen is vice president of business development at Reeco.
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