E-procurement in hospitality growing in importance

Hoteliers need to pay more attention to their procurement and purchasing functions, and force their suppliers to provide e-catalogues

Steven Speter speaking at the Hotelier Middle East Procurement Summit 2015.
Steven Speter speaking at the Hotelier Middle East Procurement Summit 2015.

Steven Speter, managing director, 36 Strategies has urged hoteliers to turn their attention to implementing e-procurement practices.

He said that 50-60% of a hotel’s operating cost flows through procurement, and that “its an enormous part of the business; procurement is the backbone of the entire organisation,”

Speaking at the Hotelier Middle East Procurement Summit, Speter urged hoteliers to devote attention towards hotel procurement, and focus on e-procurement. “Firms and hotels follow e-procurement to be more efficient, as the sheer amount of finance that flows through procurement is enormous. It is not only about the goods and services you procure, but the amount a hotel invests in the process itself.Which means, if you can execute your tasks better, expenses will be drastically reduced.”

Did you like this story?
Click here for more

Speter also pointed out the amount of cash that firms, ranging from UAE SMEs to large hotel chains, spend on raising an LPO. “The industry benchmark is US $75 per LPO, and UAE SMEs produce 65 LPOs a day. This results in a staggering US $4875 per day in raising LPOs. We arrive at this figure based on several parameters that include human capital investment, power and energy consumption etc.”

“Processes cost money, and that’s why e-commerce is the way forward. But, there are two other avenues that you need to be considered, catalogue management and naming convention. Without a proper catalogue, suppliers will hamper their own progress,” he added.

Speter also advised to be careful of what suppliers do in order to reduce costs. “You have to be watchful of how suppliers offer you a better price. The most common practice is with a paper napkin, suppliers often return with a lowered cost, after being rejected initially. Mostly they manage to reduce costs by lowering the GSM (thickness) of the napkin, making it appear cheap and substandard. This is, hence, another example of the importance of a well-defined catalogue."

“I’m a supporter of e-commerce and am staunchly against ERP systems,” he said.

The full report from the Hotelier Middle East Procurement Summit will be published in the December 2015 issue of Hotelier Middle East.

For all the latest hospitality news from UAE, Gulf countries and around the world, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page.

Most Popular



Human Capital Report 2017

Human Capital Report 2017

The second annual Hotelier Middle East Human Capital Report is designed to explore the issues, challenges and opportunities facing hospitality professionals responsible for the hotel industry’s most important asset – its people. The report combines the results of Hotelier Middle East's HR Leaders Survey with exclusive interviews with the region's senior human resources directors.

Hotelier Middle East Housekeeping Report 2016

Hotelier Middle East Housekeeping Report 2016

The Hotelier Middle East Housekeeping Report 2016 provides essential business insight into this critical hotel function, revealing a gradual move towards the use of automated management and a commitment to sustainability, concerns over recruitment, retention and staff outsourcing, and the potential to deliver much more, if only the industry's "image problem" can be reversed.

From the edition

From the magazine