A Group Purchasing Organization, or GPO, is an organization that creates and facilitates efficient, price-reducing relationships between operators and suppliers.

Much like a dating service, a GPO seeks operators and suppliers and matches them according to operator needs and suppliers’ ability to meet those needs—creating a network of exchanges and relationships within an industry.

In the world of impersonal GPO relationships, Source1 strives to be not just a ‘dating service,’ but a friend that personally understands operators’ needs.

Although the goal of reducing costs is simple, the power of this complex network is often misunderstood.

 

5 Buzzwords to Help Better Understand GPOs

 

1. Value Stream

Because of the middle-man nature of the GPO, many groups are involved in different parts of what Source1 CEO Scott Hoffmire refers to as the value stream.

“Source1 does the block and tackle work—helping everyone upstream and downstream, uniquely starting with the guest,” he said. “We help everyone below and coordinate everyone above.”

Those ‘below’ are the operators, who receive the benefits of the coordination work of the suppliers upstream in the process. Although this value stream involves both the operator and supplier – to be most effective, the “energy” needs to be derived from only one party: the guest.

 

2. Pivot

The role the GPO plays in this value stream involves pivoting between operators and suppliers to ensure that needs are met.

“We are the pivot: the group that makes it happen by determining client needs and turning back to the manufacturers to get the best price and quantity,” Hoffmire said.

In the case of Source1, this pivoting role proves very advantageous to all involved: because of the 3,000 operator-network accumulated by the Source1, it boasts $7 billion dollars in buying power. However, with great power comes great responsibility and care: Source1 is dedicated not only to decreased costs but customer and operator satisfaction.

 

3. Leverage

This buying power is evident in Source1’s mission to harness “the leverage of billions, the power of one.” Because low pricing is garnered by high-volume leveraged buying and positive relationships with manufacturers, operators receive the best pricing on the market for a wide range of goods. Bottom line: As the GPO network grows, so do the savings.

The leverage provided by Source1 does not end with lower prices: Source1 strives to be “operators serving operators”—that is, many Source1 employees are actually garnered from the types of operations they work to serve. By understanding the needs of the operator, Source1 inherently understands the needs of the dining guest.

 

4. Parking lot to rooftop

With lower costs, operators can choose the optimal goods for their firms: Source1 offers food, glassware, maintenance supplies, housekeeping chemicals, and almost all necessary goods to run an establishment—“from parking lot to rooftop.” So many categories—and over 6,000 branded items with 500+ national contracts—allows for a virtually unlimited selection that can equip all aspects of an establishment.

 

5. Catalyst

These benefits would not be possible without a GPO; the organization acts as a catalyst that positively enriches the buying and selling experience between operations and suppliers.

“Source1 helps obtain the best pricing, discover opportunities and meet goals. We bring in products specific to making their dining customers happy,” Hoffmire said.

In the case of Source1, the goal as the catalyst and facilitator of these opportunities also includes an understanding of all levels of the process—especially everyone’s main concern: the customer.

“Our competitors just give them a price book,” Hoffmire said. “We work closely with clients to meet their needs. We are operators serving operators; and in the end, the most important person in our process is the guest.”

 

Written by: Gabrielle Gresge

Designing and implementing a successful purchasing program doesn’t have to be an excruciating process. However, in order to accomplish such a purchasing program, you must put in it some thought about purchasing best practices and take time to plan. The following are a just few things you can do now to improve your purchasing program and begin saving money as you work to improve your purchasing practices:

1. Avoid taking relationships for granted.  While you may have been working with the same salesperson for years and are comfortable with their business, this doesn’t mean he or she has your best interest in mind. The truth is, everyone has his or her own best interests in mind.  Don’t be complacent just because it’s what you are comfortable with. Instead, you should consider comparing cost annually to ensure you aren’t overspending.
2. Spot-check your deliveries.  If you orders are sold by count, be sure to count it; if it is sold by weight, then weigh it. All of that extra time that you spent negotiating a great deal will be wasted if you don’t receive the right product at the price you agreed to.  These mistakes in delivery could be costing you a large amount of money.
3. No purchase is complete until it is fully paid for.  Vendor financing can be very costly.  It’s essential to understand that the price you pay and the quality of service you receive are affected by your willingness to pay within the terms you have agreed to.

Improving your purchasing practices may take some time, but if you invest your time wisely, over time you will see the dividends.  Money you save in purchasing will typically flow directly to your bottom line.  To avoid the hassle of following other more complicated steps in addition to the ones listed here, let Source1 Purchasing handle it for you. Source1 Purchasing is a leading strategic supply chain management group focused on cost management, savings and operational efficiencies for the hospitality industry, providing you with a complete purchasing solution for all of your food and beverage procurement needs so that you can keep your focus on your guests! To learn more about the Source1 Purchasing Program and how it can benefit your establishment, visit our website at www.Source1Purchasing.com.

Forget the outdated concept of room service and embrace the newest trend in the hospitality industry: the hotel pantry. The pantry is available to meets the needs of your guests when they are looking for a light snack, quick meal or even some aspirin after a long day of traveling. This recent hospitality trend has become a brand standard for many hotel brands, such as Marriott International’s “The Market” and Hilton’s “Pantry Pavilion” and “Suite Shop.” These pantries are a great source of revenue, however, when in the beginning stages of planning a pantry for your hotel, how do you select the right products and categories that will best meet the needs of your guests while ensuring you’re earning a profit and making the offering worthwhile? You must keep a few things in mind when developing your hotel pantry assortment. First, you must decide what categories should be included as pantry necessities, such as sweet snacks, salty snacks, healthy snacks, quick meals, ice cream, frozen dinners, and travel size amenities. Then, what are the best sellers in each of those categories? You will be able to determine these categories based on market research. Continue reading to learn how to stock a pantry to keep your guests happy!

1. Stick with what you know. Offer popular products that your guests search for when stepping into a pantry. Some hotels want to stand out by offering only regional items or organic products. This can be beneficial, but national brands typically outsell specialty items 4 to 1. Research has shown that guests, especially families and business travelers, prefer comfort foods from well-known brands while they are traveling rather than trying something they have not had before. By offering items that guests are familiar with, sales and guest satisfaction will rise.
2. Use room rates as budget indicators. The room rate of a guest’s hotel is a great indicator of their travel budget and should be factored in when selecting the offerings in a pantry. For example, a guest who is willing to pay $200 per night to stay at a hotel is more likely to pay $7 for a pint of premium ice cream such as Ben & Jerry’s or Haagen Dazs. However, a guest who chose an economy hotel at a $49 per night rate is more likely to opt for an inexpensive ice cream product in the $3-4 range, such as Klondike or Good Humor novelties. Studies have also shown that generic or guests, no matter what their budget, do NOT usually prefer low budget items because they are normally associated with being low quality. If these products are stocked in the pantry, you will find that they will not sell as quickly, even if they are a low price.
3. The bigger the better. You’ll find that guests typically purchase the 20oz soda, the King Sized chocolate bar, and the large “grab bag” chips. These products sell better and faster, presenting an opportunity for larger profits. Market retail analysis of over 400 Marriott Markets shows that King Size beverages, candy bars, and potato chips outsell their normal size counterpart across all categories where a king size alternative is offered. To put it into perspective, the single serve 1 oz bag of Lays can be purchased from your food service company for about $.35 each (depending on your negotiated price) and can be sold in the pantry for $1.00. That’s about a 200% markup and $.65 profit per bag. However, a king size or grab bag size (2.25 oz) Lays sells wholesale for about $.65 and can retail in a hotel pantry for $2.00 or more. That’s about a 225% markup and $1.35 profit per bag. These simple size options can greatly increase your profits.
4. Switch things up. Guests want options – not just in the number of products being offered, but also in the categories available. A guest should be able to walk into the pantry and find a satisfying solution to for cravings. This means that if a guest needs to satisfy a sweet tooth, he should have several choices to choose from, including chocolate, cookies, and candy. If the guest comes in and is trying to stick to a diet, he should be able to select from a variety of healthy products like energy bars, trail mix, or Lean Cuisine meals.
5. Remember! Travel size assortments and single serve over-the-counter medicines are very popular sellers, but are commonly overlooked by hotels. These products allow you to meet the needs of your guests while earning a healthy profit, since most wholesale for under a dollar and can be sold for $2.00 or more. When properly supplied and merchandised, these assortments fall in the top five for all pantry offerings.

No matter what region or guest profile being served, the convenience of a well-supplied pantry market can greatly improve guest loyalty and increase sales for hotel operators. Selecting the right offerings is the first step towards hotel retail success. Source1 Purchasing is a leading strategic supply chain management group focused on cost management, savings and operational efficiencies for the hospitality industry and offers a wide assortment of products to stock your hotel pantry in order to increase your profitability and guest satisfaction. To learn more about the Source1 Program and how it can benefit your hotel operations and efficiency, visit our website at www.Source1Purchasing.com.

After adding up the the costs of advertising, marketing, and sales people used to attract new customers, it is easy to see that obtaining new customers costs much more than keeping your current guests loyal to your hotel. Surveys have proven that the top reason customers stop returning to a hotel is because they feel unappreciated. To reduce costs hotel operators should prioritize hotel brand loyalty and keeping current guests happy.

 

1. Leave a lasting impression. Show your guests how much you appreciate their business with a parting gift or even a sincere “thank you.” A few ideas to impress hotel guests: give them a small box of truffles or a jar of jam with your logo as a memorable personalized thank you. To take the hospitality one step further, handwrite a thank you note that is custom-made especially to your guest.
2. Keep in touch. Make sure your guests remember who you are and remember their stay, even if they only visit once. Throughout the year, send a letter or email that keeps them updated on the latest activities and news at your establishment and tell them how much you look forward to their next stay with you. Create a social media presence for your hotel by making updates, running contests, and posting pictures on various social media platforms, such as Facebook, Twitter, or LinkedIn.
3. Reward their loyalty with exclusive deals. Design special packages or deals just for your guests that are a part of your loyalty program. This displays your appreciation for their loyalty, encouraging them to choose to stay with you rather than your competitors in the future.
4. Ask for feedback. Don’t take your guests for granted just because they stay with your hotel regularly – more than likely, they have feedback to give you. When you receive feedback from your guests, be sure to fix any issues they have observed as quickly as possible. Negative feedback creates an opportunity for you to exceed expectations, show your dedication to your guests, and let them know that you do care about their opinion. Promote face-to-face interaction – start a casual conversation with a guest, and then ask if they enjoyed their stay and what they would like to see improved for their next visit. When there is an issue, keep your guest updated and inform them when it has been resolved. Be sure to check websites like TripAdvisor.com as well for reviews, good or bad.
5. Train your staff. Your staff should have the appropriate training and tools in order to provide the level of service that your guests expect and deserve. Your staff should be able to recognize loyal guests and handle any complaints that may come their way. By having confidence and authority, your staff will appear more professional, leading to more trust from your guests. If your staff is able to resolve a negative situation without your assistance, that’s even better.

The hospitality industry revolves around hotel guest loyalty, so when you see an opportunity to wow your guest, take advantage – it could make the difference between that guest returning or choosing to stay somewhere else. Source1 Purchasing is a leading strategic supply chain management group focused operational efficiencies for the hospitality industry in order to keep your business running smoothly and helping you keep guests coming back time and time again.

A recent article by USA Today discusses an alternative to hotel room service: groceries. The popularity of grocery delivery services is increasing significantly among extended-stay hotels, but even other types of hotel properties are embracing the concept rather than continuing the use of traditional room service. Moreover, as the demand for healthier food options rises, more hoteliers are offering delivery services that include healthy meals or snacks for sale.

“It’s not the home kitchen, but gets guests closer to a home-like experience, which is what road-weary travelers crave,” says Maryam Wehe, senior vice president of Applied Predictive Technologies, which does consulting for hotels. “While travelers are just as time-starved as ever, they are increasingly health-conscious while on the go. Through healthy food delivery options, hotels are taking another step to bring the comforts and lifestyle of home to guests.” 

The article also includes this more specific example of this new hotel trend:

“Affinia Hotels, a boutique hotel chain with properties in New York, recently announced a partnership with FreshDirect, a New York City-based grocery delivery service, to deliver ready-to-make meals to guests. There’s a Business Kit and a Healthy Kit, each with such items as fruit, vegetables, Greek yogurt, chips, salsa and cookies. The kits also have four-minute meals such as lemon-dill salmon, which can be heated in a microwave in each room’s kitchenette. The kits can be ordered in advance through Affinia’s online e-concierge service.”

Senior Vice President of brand management for Affinia Hotels Lisa Zandee states that guests enjoy the hotel grocery delivery service because it allows more variety that otherwise wouldn’t be available through room service and a hotel room mini bar.

In addition to convenience for guests, phasing out room service can benefit hotels due to their costliness to run versus the low revenue they generate.

The article states “room service revenue has dropped 9.5% from 2007 to 2012, according to PKF Hospitality Research,” showing that the service is becoming less significant and more costly over time.

As you move to a new food and beverage trend for your hotel, it’s essential to explore your supplier options to ensure low food and beverage costs. As a top supply chain management group, Source1 Purchasing is focused on cost management, savings and operational efficiencies for the hospitality industry, offering hotel operators with the best purchasing options to fit their needs.

The most consistent factor that goes into continuous guest loyalty is perceived quality. According to recent studies, guest perception of the value provided by hotel management is down in the United States. Here we’ve provided you with a list of what guests value most in order to help you better understand what drives value, how guest preferences have changed over the past year, and how to improve hotel guest satisfaction.

Adequate Room Lighting: It is fairly simple to get hotel room lighting right – or wrong. Lights that don’t work correctly are obvious, disappointing, and even more aggravating, which in turn drops value perceptions. When a guest complains about lighting, it should be fixed immediately, not ignored.

Internet Access: In 2012, a USA Today survey revealed that the favorite hotel amenity of guests was Wi-Fi over everything else. Now more than ever, guests still place a high value on Internet access making it an important part of a brand’s value proposition. When determining if your Internet offering will meet guest expectations, consider the following:

• Does it work?
• What is the bandwidth like?
• How does a guest access the Internet?
• Is it free?

According to a June 2013 survey by Hotels.com, 67 percent of travelers felt that in-room Wi-Fi was the most important hotel service they look for when booking. Many guests are able and want to be able to access the Internet through their tablets and smartphones, however, one-third of U.S. hotels do not have free Wi-Fi available to them.

Comfortable Furniture: Guest comfort establishes a standard for guest value. As competition among hotel operators increases, guests have more opportunities to travel and compare services and offerings. Hoteliers who decided to put off renovations a few year back should now consider making those changes in order to keep up with competitors. Even today with what all guests expect as far as complimentary amenities, this fact remains the same, the focal point of guest satisfaction is consistently a comfortable place to sleep for a reasonable price.

Top-Notch Service: Exceptional service is always a necessity in the hospitality industry. This aspect not only accounts for a 10-15 percent improvement in loyalty, but that outstanding service also stimulates a guest’s emotional experience, positively affecting their perceived value.

When it comes to improving value for price, you should focus on delivering the things that improve value perceptions. From this, we have learned that guests value Internet and lighting that works correctly, a comfortable place to rest, and excellent service. However, it is also important to remember that guest preferences change regularly and you should continue to communicate with your guests, and research hotel Industry trends to ensure you’re adapting to these changes.

Rather than having to cut rates to improve hotel guest satisfaction, hotel operators may consider adopting better purchasing practices to reduce operational costs. Source1 Purchasing is a leading strategic supply chain management group focused on cost management, savings and operational efficiencies for the hospitality industry.