Amy Bostock: From your perspective as a supplier to the hotel industry, how is inflation impacting buying decisions of your hotel clients?
Vito Curalli: While inflation has impacted pricing in key categories, such as F&B and OS&E, we are seeing signs that inflation is starting to decrease from the highs we’ve seen in the past few quarters and are optimistic that pricing should begin to stabilize as we enter Q2. The record highs we’ve seen in the Consumer Price Index have certainly impacted the buying decisions of our customers across all categories, as owners and operators seek to keep market-basket costs neutral while continuing to deliver an exceptional guest experience
With F&B, we’ve seen our customers adjust everything from menu offerings — substituting high-dollar proteins, for example, with more cost-effective options — to hours of foodservice operations as they work to keep pace with the climbing cost of goods and labour. What we’re also seeing, though, is a rising impetus among customers to align their buying decisions with a procurement partner such as HSM. The world’s supply chains have come under intense scrutiny in recent years, and one by-product of that is more hoteliers are recognizing the significant value that comes from alignment with a global purchasing partner, in terms of size, scale, and the ability to negotiate better pricing on those items our customers need most.
Lorne Gaffe: For the most part, full-service hotels were operating with minimal or limited foodservice for the last two and a half years. As such, there was no purchasing activity in tableware and most hotels did not experience the increases in freight and raw materials. As they begin to purchase in mid 2022 and 2023, they will see significant differences from 2019/early 2020. All have adjusted their budgets accordingly.
Afsar Ali Khan: The main impact we have seen with our customers is they have run on tighter inventory or postponed some purchases because of inflation. Our customers still need the operational supplies because occupancies have been strong, but they may run 2+ par on sheets and they are normally three par to save a little money. Avendra has been proactively managing inflation for the past 18 months, and we are proud that our customers are shielded from some of the inflation the hospitality market has seen. We deploy several inflation-control activities to help minimize the impact inflation has on our clients. As a result of these efforts, Avendra customers, on average, have experienced lower inflation than the market.
Shannon Hall: We are seeing customers turning to faster and easier ways to clean. With labour shortages, housekeeping staff are being tasked with a higher workload and longer days. Equipment needs are changing to help support reducing manual tasks, such as upright vacuuming or mopping floors. Introducing Sweeper vacs for hallway and large to reduce the use of upright vacuuming in hallways, and large floor areas is a great way to save time. A 464 sweeper will pick up small debris and does a better job at dust pick up [compared to] an upright vacuum. From a labour perspective it’s equivalent to five people vacuuming, which combines both productivity and performance. With the average lifespan of an upright vac being 500 hours, changing tools and equipment can help operators reduce operating costs throughout the year. Other options that we are seeing are use of the micro-scrubbers for compact areas versus traditional mopping. Not only does the scrubber reduce the spread of dirt and bacteria, using a micro-scrubber can reduce the time spent on the task by 75 to 80 per cent.
AB: How is your company coping with supply-chain shortages?
AK: While spot outages do continue, product availability continues to stabilize. This is the result of manufacturers rationalizing product offerings and making progress to catch up with the high demand from the past several months. Avendra tracks manufacturer fill rates of master food distributors and identifies and communicates substitute options where shortages exist. We advise our clients to continue to communicate their needs as often and as far in advance as possible with distributors.
SH: We have been lucky for the most part with supply-chain shortage. As a Canadian manufacturer, the majority of our products are manufactured in Ottawa and we have had only a few small issues with supply over the last two years. The biggest issue has been on the equipment side of the business and upright vacuums were delayed for several months. This was a great time to introduce customers to our canister vacs, the DB Series, as they are relatively the same cost or less than a standard upright, but the longevity of the units average three-times longer than uprights.
LG: Entering 2023, supply chains are dramatically more stable than they were 15 months ago. Our biggest challenge is forecasting. Our customers no longer maintain significant staffing to provide us with ample lead times based on their inventory counts. Requirements are more immediate as we are not notified of re-orders until the customer is out of product.
VC: We continue working closely with all our vendors to secure uninterrupted supply chains for our global network of more than 13,000 participating properties. Through continuous communication with our vendors, we are able to provide insights to our customers on a daily basis. HSM continues to lean on our strong pipeline of supplier relationships to circumvent shortages for customers. By leveraging our global scale and the agility of our 3,000 plus supplier partners, our team can anticipate longer lead times, forecast potential shortages or outages, source high-quality product alternatives, as applicable, and insulate our customers from cost increases driven by inflation. Our category management experts are also leading the design and development of new product innovations when shortages prompt a fresh look at current marketplace offerings.
AB: What are the main challenges hoteliers face when it comes to sourcing products?
VC: Right now, one of the main challenges hoteliers face is around sourcing the necessary products, services and skilled labour to execute property renovations. On the heels of pandemic-era challenges, hoteliers across the globe are looking to re-fresh their properties in an effort to elevate the stay experience for returning guests and, by extension, capture greater market share to accelerate the recovery process. This spike in demand for FF&E goods and services means many hoteliers are encountering delays, backlogs and lengthy wait times around renovation work — coupled with the strain of sustaining daily operations while staffing numbers have yet to recover. Hoteliers are having to juggle existing guest needs against future guest expectations, and that’s probably the number-1 challenge our operators are facing today.
AK: The biggest challenge is the inflationary pressure — products and service will cost more than they did a year ago. Availability of certain products may be limited, making it difficult for hoteliers to source everything they need precisely when it’s needed. This requires planning ahead more than normal or needing to carry a little extra stock (to the extent storage space will allow) to avoid shortages at an inopportune time.
LG: Internal staffing is a global challenge that significantly effects the hospitality industry. Many properties lack a full complement of staff and resources that have complete understanding of processes, vendors, lead times, and tools required to functionally run a full-service property.
SH: What we often see is that hoteliers are only exposed to what their distribution reps show them. They miss out on a lot of what is new or offered through other sources. They may not have the opportunity to see the full benefits that can be offered to them to meet with a number of their goals such as sustainability and productivity improvements and health and safety.
AB: How do you and your company help customers overcome these particular challenges?
SH: We offer a no-charge site survey where our team comes in and looks at your hotel, operations and your goals and objectives. From there we compile a savings summary and prepare a plan for you that is tailored to your site’s needs. If the program is implemented,
we provide easy to use tools and training to provide our customers with a complete solution.
VC: HSM provides purchasing support and strategic sourcing solutions for customers in all categories across the industry. We support the properties in our global network with the information, insights and tailored programs to secure the right products and services at the right price, directly connecting our customer base with more than 3,000 suppliers around the world, as well as our in-house team of strategic account advisors. As hoteliers ourselves, we understand the challenges that owners and operators face on a daily basis — and this understanding is critical to our success solving the problems and meeting the needs of today’s hoteliers.
AK: As mentioned earlier, we battle inflation daily. For availability, Avendra monitors supplier performance to drive continuous improvement and utilizes our size and scale to help ensure our customers are prioritized when supply is tight. We also proactively identify any supply-chain challenges and communicate with customers to mitigate impact. Avendra provides product and supplier alternatives, and our customer service team stands by to help solve and escalate issues with contracted suppliers.
LG: We have created a localized, highly consultative method that engages each property. Our team supports, walks through the complete process, and assists with those that need quick turnaround. In certain markets we’ve developed an online tool that supports properties with their re-supply.
AB: What role does technology play in helping to address supply-chain challenges, both from a supplier and customer perspective?
VC: Technology has been integral to our organization’s risk-mitigation efforts throughout the recovery process and, more recently, in the wake of the travel industry’s booming resurgence. Our simplified, scalable eProcurement solutions are one of HSM’s key differentiators as a sourcing partner — particularly as everything we do is done through the lens of hospitality. For customers, our digital-procurement platform enables easy online ordering, coupled with the efficiency of searching a wide database of quality product alternatives when faced with potential shortages. For suppliers and distributors, we engage industry-leading digital and analytics-reporting platforms to offer our partners full visibility over HSM transactions to aid in better forecasting and prediction of lead times. And we leverage our entire technology platform to push out timely, relevant communications to both customers and suppliers, ensuring that our partners have the right information in hand to drive data-based decision making.
AK: Technology plays a key role in improving supply-chain efficiency and provides customers with greater visibility into the supply chain, allowing them to track their orders and receive updates as to when an order will arrive. It can also make it easier to search and compare products and reduce the time needed to find the right product. Furthermore, with data analytics, technology has made it possible to collect and analyze data on demand trends, product usage and supplier performance, helping customers to make more informed sourcing decisions.
SH: Automation and robotics are areas where companies are making large strides. We are seeing some partners creating systems, such as Wanda from Bunzl, that connects devises to help identify where there are gaps in cleaning and reporting or to advise when something needs to be replaced, such as hand soap and paper products. These tools can be very helpful in improving service and aiding in labour shortages.
LG: Faxing orders is a thing of the past, we digitally forecast and share market demand. As a global supplier, we gauge demand and inventory in each region, reacting accordingly. Utilizing email and social-media campaigns allows targeted marketing based on trend and product availability.
AB: What new products or offerings has your company launched recently?
SH: Our partnership with Square Scrub has been a great success. The Doodle Scrub is a small orbital floor machine that is perfect for tile and grout and is used for small spaces such as inside showers, under urinals, behind toilets and stairs. Customers are thrilled with the cleaning results and the time savings from these traditional manual tasks.
We have also launched a new Ecologo bio-based cleaning solution. Bio-Bac Free is a complete solution that cleans and de-greases both hard and soft surfaces. It’s an excellent solution for dealing with odours from drains, waste receptacles and facies. It’s a product that does 99 per cent of your cleaning needs and is designed to be a more natural way to clean. It’s also part of our Buy1 / We Plant 1 program.
LG: We have an expanded portfolio in all our key categories. For dinnerware, our new collections include highly sought-after Portuguese ceramics as well as Canadian designs manufactured in Portugal. Flatware has several new patterns that include trend setting sand-blasted and antiqued versions of our most popular ranges. For glassware, we’re offering more coloured fashion glass as well as wine stems commemorating Zwiesel’s 150th anniversary.
VC: Hilton recently launched its 19th brand — Spark by Hilton, the enterprise’s first premium-economy brand — and HSM is occupying a significant role bringing this conversion-only brand to market. As Spark’s sole procurement provider, our team will be working closely with every ownership group to effectively support the conversion of each existing property into a Spark by Hilton hotel. Our experienced Category Management and FF&E Project Procurement teams will help owners navigate the conversion process from contract to completion, including support sourcing all required products, procuring the FF&E, assistance in adhering to project timelines, and managing supplier capacity to deliver this new brand in an expedited fashion.
In addition to our role with Spark, HSM is also doing exciting work right now across the F&B space. Current brand-specific initiatives range from seasonal waffle flavours for Hampton hotels to a new gluten-free, allergen-friendly cookie designed to create a more inclusive welcome for DoubleTree guests. Our F&B team is also doing incredible work right now connecting hotels with more sustainable, responsibly sourced products, from our launch of the world’s first climate-positive spirits in the UAE to our pilot program using AI to reduce food waste and carbon emissions at partnering properties across 10 countries in EMEA.
AK: In addition to spending a great deal of time on the points mentioned above, fighting inflation and supply-chain challenges, we also worked closely with our clients to plan and deploy the large-format amenities. Our portfolio of plant-based offerings in the last several months has also grown. We are always exploring new programs. For instance, we are working on a program that can match musicians with hotels to play gigs for events or in public spaces (think: Uber to connect musicians and events, that take place at hotels).
AB: What is the most in-demand item(s) for hotels right now?
SH: Auto scrubbers, vacuums and sweepers have seen the highest demand as many suppliers whose products are produced overseas have seen delays in inventory between six and 12 months. Again, we’ve been in a lucky position of having inventory and our production has had minimal impact. Training is in demand as turnover rates are at an all-time high and on-boarding new team members is challenging. Most suppliers have some form of training or train-the-trainer programs that can be taken advantage of to help support housekeeping and hotel staff.
VC: Regardless of category or tier, all hotels are continuing to face peak demand for certain F&B items, particularly around those commodities (eggs, beef, poultry, et cetera) most affected by global shortages and domestic food-price inflation. We’ve also seen demand spike for OS&E items ranging from textiles to bath amenities, as well as a big surge in FF&E Project Procurement work as more hotels look to renovate and/or upgrade their spaces.
AK: Sustainability has been a driving force for the past several months, which has resulted in an increased demand for large-format amenities at many hotels. This approach removed all the small bottles from the waste stream. In addition, replacements were needed in order to remove single-use plastic in food and beverage (i.e., plastic cutlery).
LG: All fundamental items that allow guests to eat, drink and be merry. But seriously, basic, and essential items that are needed for service are the most in-demand.
BY AMY BOSTOCK
