How to negotiate successful procurement deals

With the emergence of hotel procurement as a front-of-house function, it is important for procurement managers to be good negotiators to be successful.

Mubashar Shahab, executive director & head of global procurement, FRHI Hotels and Resorts defined what it takes to be a successful negotiator at the Hotelier Middle East Procurement Summit, which took place on November 3, at the Grosvenor House Dubai.

“The region has its own set of challenges versus the rest of the world. Suppliers always return with a reduced price. You need to check if price is the only criteria you look at (when you procure)," he said.

That means contract negotiations are extremely important. “Both parties need to come to an understanding to address the requirements. The outcome of the negotiation has to be beneficial to both parties. One also needs to be open to a compromise, negotiations are not always about getting things done your way."

Shahab continued: “But you cannot achieve fruitful negotiations without defining a well-defined strategy, and for that you need have simple processes in place. The key to a successful negotiation is to spend enough time in preparation, understanding the needs of the hotel. It’s also important to understand your supplier channels. There are time you are up against a monopolistic system, you have to learn to work with it.”

Negotiations can be unpleasant at times, but that should not hamper purchasing managers from closing the deal, according to Shahab. “You have to be very careful while negotiating a deal, beware of how you word it, communicate it and to whom it goes out to. However, it’s crucial to get face time between the two parties, human contact goes a long way.

”To negotiate is an art - that involves human sentiments such as warmth, understanding between the two parties, trust and the ability to reach a mutual understanding.”

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Shahab warned not to push suppliers to the limit, and urged for a certain degree of understanding in negotiations. “With new suppliers coming in to the market, along with the new supply of hotels, we need to seek on working out long relations with them. A good negotiation can hence go a long way in ensuring that.”

Buyers and suppliers need to be empathetic towards each other, while still being professional, he said.

Finally, never forget to write down the outcome of your negotiations, Shahab advised. “You could tick all of the above boxes, and forget to list the points down in a clearly defined contract. It’s very important to close the deal, and that can only be possible once you systematically follow through with the negotiations,” he concluded.

Read the full event review in the December issue of Hotelier Middle East.