Mid-market roundtable: Supplying the demand

Meet the experts

Grandeur Hotel general manager Anwar Hussain

Dunes Hotel Apartments general manager Faisal Abdul Rehman

Comfort Inn Hotel general manager Hirosh Asuhar

Gloria Hotels area general manager Freddy Farid

Al Khoory Hotels hospitality group general manager Pierre Sokhon

Louvre Hotels group assistant financial controller Philip Eappen

Mark Nogal Hilton regional head focused Service brand management, EMEA

Rotana Centro Sharjah general manager Michael Kasch

Time Hotels CEO Mohamed Awadalla

Al Bustan Centre and Residence COO Moussa El Hayek

Riyada international Hotels & Resorts director of operations Saudi Arabia Raji Abou Ghanem

Lemon Tree Hotels deputy managing director Rattan Keswani

Al Maha Arjaan by Rotana general manager Sherif Madkour
 

What challenges do hoteliers face when sourcing new suppliers?

Pierre Sokhon: The challenges differ from international chains to local chains, largely because in local chains and small three-star properties, the hotels have limited resources and capabilities. At Al Khoory Hotels, our most common challenges are: finding the right supplier for the product, lack of resources and data and comparing the product to those offered by other suppliers. Additionally, the price factor remains a challenge when sourcing new suppliers, as does negotiating terms and conditions of contract.

Hirosh Asuhar: It is tough to find new suppliers that can provide the same brand, quality, timing and pricing that we have come to expect. The quality of the product has to match with our requirements and expectations and it has to compare favourably to the old product. Delivery times and replacement policies have to be taken care of too, in addition to challenges associated with obtaining credit.

Mark Nogal: Making sure suppliers are good quality is a challenge, as is leveraging our buying power in new areas and finding good suppliers. To overcome these challenges we will request samples from vendors in order to make sure both quality and cost are suitable.

Anwar Hussain: In search of new suppliers, we face challenges in terms of getting a suitable credit facility period, ensuring high product quality and ensuring suitable supply time-frames.

Freddy Farid: Procurement in general needs to demonstrate it can contribute to the top line as much as the bottom line. Dealing with suppliers requires time to build trust and conduct market research. Current issues we are facing include product liability, product availability, lack of post-sale services and commitment by suppliers to meet deadlines.

Vishal mehra: Hoteliers face strong competition in the market with competing hotels offering lower rates, higher discounts and more amenities with the room to secure a higher percentage of the production. Thus forcing other hotels to follow the same trend to compete when sending proposals to potential suppliers. High margins and monthly fees requested by the supplier, leading to a reduction in GOPPAR are also an issue.

What are the top reasons why hoteliers change suppliers?

Anwar: The top reasons why we may change our suppliers include rate increase, price changes during the contracted period, product quality changes, suppliers failing to meet the demand or supply full quantity, in addition to
late delivery within the stipulated time.

Hirosh: We try not to change our regular suppliers due to the level of comfort we have between hotel and suppliers built up over long periods of time. Only when we end up with major issues like the price regularly fluctuating due to low production, the product is not up to the expected standard or because of the market downturn and low budget, then we are forced to find new suppliers who can provide same quality with better price.

Mark: Issues regarding suppliers meeting hotel demands can lead to a hotelier changing suppliers. A supplier must be able to keep up with the rate of new openings in a region, failure to do so can result in lost revenue.

Furthermore, quality issues should be addressed quickly and the guest must never be negatively impacted by supplier issues. Sherif Madkour: Every hotelier has their own likes and dislikes when it comes to products and suppliers. The top reasons for changing suppliers would include noncompliance of standard or quality, difference in costs and having a specific requirement that existing suppliers cannot meet.

Vishal: Hoteliers may change suppliers when the guaranteed production promised by the exisiting supplier fails to materialise (especially with smaller supply companies). This can leave the hotel general manager having to invest time and effort into proper system setup and additional training etc.

How important is networking at exhibitions to find suppliers?

Pierre: Networking and events are very important especially for mid-market hotels as they are not supported by central purchasing from corporate chain offices. Attending such events and exhibitions opens your eyes to new brands and products and the latest technologies being used in hospitality sectors. At the same time a lot of ideas can be shared with fellow colleagues and suppliers in the business.

Anwar: It is very important to maintain networking activities at events and exhibitions for easy access when finding suppliers. Meeting with the suppliers during such events helps us to know their line of products, production time-frame, credit facilities, warehousing, stock and quality.

Hirosh: Exhibitions can cut off the monopoly of the local market and allow us to get better products with better prices. We can develop our knowledge through the varieties of products and explore new ideas through demonstrations, and also to tie up with them and get new contracts.

Freddy: Networking is a valuable tool to expand knowledge, learn from the success of others, attain new clients and suppliers and at the same time give you the opportunity to promote your business to others. From my experience it certainly generates referrals, opportunities and widens the connection base, while raising your profile.

Mark: Events and exhibitions are a big part of finding new suppliers in the hospitality sector. We will go to trade shows globally as they are a great opportunity to meet vendors and explore new products on the market. We have a big push to be green and to keep up with the latest technology; this is important for Hilton hotels and our guests, so we aim to find and utilise only the best vendors in both these areas.

Mohamed: Networking is an excellent way to find out what is happening in the market, in addition to new services and products, market trends and so on. We are in the people business and often handpicking the right supplier will never just depend on price, nor simply on quality. We need to be able to rely on our suppliers, because on occasions we may need to make a request that is not strictly within our agreement, that’s when relationships come into play.

Moussa: It is essential to participate in events and exhibitions because it provides a huge platform to meet existing suppliers and know their latest products. In addition, it is also a good opportunity to select from an extensive list of new suppliers. The advantage of networking at events and exhibitions is that it allows you to acquire a wide range of knowledge about product developments in a short period of time.

Raji abou ghanem: Networking at these kind of industry exhibitions is important in terms of having more choices and having the opportunity to meet new suppliers. However, in my opinion many good suppliers are well known in the market and you may reach them at any time.

How important are hotel refurbishments, especially in a growth market?

Faisal Abdul Rehman: Refurbishments are very important in this growth market, since many new properties have opened, or are in the pipeline with latest facilities and services. The hospitality industry is ever changing and the technology advancement is fast paced these days.

To cope with the dynamic industry changes in facilities, services and technology, property refurbishment is mandatory at regular intervals.

Freddy: Refurbishments form a very important part of the hotel industry, especially for the owners to upgrade their assets, add value and for the hotel brand to maintain a competitive edge against its competitor set, in addition to keeping up with the ever-changing trends and facilities to meet the needs of travellers.

Pierre: Refurbishments are essential, especially in a competitive and growing market. To maintain your brand image your product has to be always maintained and kept in excellent shape as this reflects what and who you are in the eyes of your customers.

You have soft uplifting meaning small touches and few items to be changed or upgraded. Or full refurbishment where all furniture has to be changed, modified, etc. in either case we have to obtain three quotations, one of the quotations would be the existing supplier.

Philip Eappen: As the Middle East and North Africa region becomes more of an established and maturing market place, there is a growing base of hotels with the need for refurbishments across all hotel segments. We are currently working on several hotel renovations as we aim to bring the properties to the new age brand standards to ensure long term competitiveness in the market place. To evolve and to innovate is the key for hotels to keep guests continually happy and loyal.

Moussa: As the market broadens in the hospitality sector, refurbishments have become vital to optimise value, maintain a competitive market position, and modernise the facility. It builds guest satisfaction both for existing and new ones by ensuring that their comfort, desires and needs are taken into consideration. In addition, it contributes to your hotel’s branding towards innovation and the enhancement of guest experience.

Rattan Keswani: Renovations and the look and feel of your property is very important. Without refreshing the product, one cannot compete with other up-and-coming, or existing brands. Funds must be kept aside at all times to remain relevant in this respect.

Sherif: It is essential for a hotel to renovate with time. With changing trends and better technology, it is imperative to keep up to date in the hospitality segment and to keep up with the growing competition in the city [Dubai].

Who is the decision maker when purchasing supplies?

Faisal : We have a few prequalified suppliers for our regular supplies like guest amenities, housekeeping cleaning materials, food & beverage products, office stationery, printing etc., however for other immediate requirements, they are purchased in coordination with the relevant head of department and purchase and accounts department.

Freddy: We have a procurement committee consisting of the general manager, the department head initiating the order request, the materials director and director of finance. The materials manager presents a detailed comparison of the products in terms of quality, price and service record. Based on these factors the committee awards the order to the supplier who meets the required criteria.

Philip: There are guidelines and approved suppliers that are screened and agreed upon by the regional office. This provides a benchmark for all the hotels when they go out and purchase OSE items. This also ensures a centralised monitoring formula of quality and product consistency when it comes to sourcing key supplies such as amenities, IT, AV and similar related matters of suppling a hotel.

Mohamed: Beyond the day-to-day purchasing procedures for basic hotel essentials, the team as a whole will be encouraged to share their opinions and preferences, when it comes to reviewing new products and services. Reports are produced to give stakeholders the opportunity to justify and support their decisions. The decision maker changes due to the nature of the product or service to be acquired as well as the impact that selection may bring to the group as a whole.

Rattan: The decision maker for purchasing supplies within the Lemon Tree Hotel group is our head of central purchase, alongside the concerned departmen’t vice president.

Raji: It depends on the purchased items, if it is considered as an asset it goes into “CAPEX” and needs top management approval, such as furniture and heavy equipment etc. If it is normal operational supply items, the general manager should make the purchasing decision, after involving department heads and the purchasing department.

Moussa: When it comes to purchasing large quantities of any supply, it depends on the company’s procedures and standards. The industry’s norm requires the department head and the purchasing manager as well financial controller to conduct in-depth research and present a comparison to the general manager. The general manager will then make the final decision based on the comparison and analysis provided.