Managing costs is becoming critical
The benefits of aligning with a Group Purchasing Organization
Jason Cheskes from Superior Lodging’s Endorsed Vendor Program
Foodbuy had the chance to speak with Jason Cheskes from Superior Lodging’s Endorsed Vendor Program. Cheskes runs purchasing support for Superior Lodging’s over 250 affiliated hotels and is the President of Above the Line Solutions, consulting and management group. Cheskes, spends much of his time examining, introducing, and leveraging hotel programs for Superior properties as well as supporting other hotel and healthcare clients on their purchasing programs.
“Managing costs in this inflationary environment is becoming more critical” says Cheskes. “Hotels must be organized enough to look at how to manage the supply chain and purchasing choices right down to the individual unit.” He states, “In my experience, if you’re not aligned to a Group Purchasing Organization (GPO), then you’re leaving money on the table.”
Cheskes feels there are too many benefits to not align with a GPO. “I look to Foodbuy here, as I feel they are best in class. If you’re a customer that is engaged and wants to genuinely see how to manage costs and find out how you can do better, Foodbuy will provide that service through analysis and product recommendations.”
One of the added areas of support provided by Foodbuy is the introduction of new programs. “Foodbuy’s procurement team is always on the lookout for new vendors and get solicited by all kinds of businesses. They bring those leading-edge programs to us to review. We have moved forward with two new ones this year already. One of the valuable nuances of the Foodbuy program is that you can also use your own negotiated programs and either allow Foodbuy to track and manage them for you, or even have them help with your sourcing efforts.”
The second opportunity Cheskes points out is the need to work with a distributor. “Not using a distributor, I would argue, costs operators’ money. You don’t want staff running to retail stores to do shopping. First, it is often the most expensive channel to buy from when all is considered, and second are price, quality, and availability variations. You may be able to get a deal one day, and then pay full retail price the next time. Hotel operators’ time is too valuable and can be better spent in other more productive and rewarding ways, such as focusing on guest experience, revenue management, and sales efforts.”
Cheskes pointed out that one key issue with the “do it yourself” approach to purchasing is risk management. “You don’t receive product recall notices from retail stores (we have been notified of a couple this year already) and you are not 100% sure how products get handled and transported by staff members (for example, dairy products purchased by a staff member, could be sitting in a hot car in the summer between stops).”
On the risk side of the equation, Cheskes points to three issues: financing, cash flow and government contracting of rooms or full hotels. “It used to be that hotels would set aside renovation reserve funds typically on a seven-year cycle.” Since Covid-19, plus the increase in finance rates, he sees many operators doing more renovations on a piecemeal basis. (I.e. Just a single floor, or individual rooms at a time instead replacing all their beds, as an example). He feels that is not an ideal scenario and challenges the ability of a property to deliver a consistent guest experience and is often not the most cost effective approach.
Interestingly, government contracting of rooms or full hotels came up in the discussion. While the revenue through the tough times was appreciated, it has come with some issues. “We see hotels getting insurance rate hikes and, in some cases, dropped by insurers who see this business creating high-risk scenarios. This is being used as an excuse to cancel their insurance. Unfortunately, some insurers don’t want to be involved with that business and that is problematic for operators. Then there is also the potential public perception issue that can impact a hotel for a long time after incidents hit the news.”
Lastly, Cheskes points to the various hotel advocacy associations as a valuable resource. “I would say one of the biggest value opportunities are the regional and provincial hotel associations. Operators should be attending their provincial or national conferences depending on their position. It is the best way to gain valuable insights to understand what is happening in their specific markets and to speak to, and learn from, others in your area.”
Brand conferences are valuable in many ways, but the provincial conferences offer topics and insights that are specific to your market. This is a time where hoteliers get together and discuss issues/opportunities in a noncompetitive environment. Cheskes indicated that, “Investing the time in having your property(s) attend these conferences and gain knowledge, perspectives and ideas at these association conferences, should be a priority of every hotel organization, owner and General Manager.”
This is an excerpt from the Foodbuy 2024 Hotel Guide. To read the guide, click here.