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HomeProcurementKey Considerations for Hotel Procurement Post Covid-19

Key Considerations for Hotel Procurement Post Covid-19

The hotel industry has specific needs which are different from other industries. There are many considerations and factors that stand out as priorities in order to achieve the consistency, flexibility and quality that guests expect when they are staying in your hotel.In hotel procurement, several responsibilities such as sourcing for materials, negotiating for contracts, payment terms and end of life management are fundamental to the job.

The hotel procurement function normally reports to the financial controller and is a part of the finance department. The most part goes unrecognised is that procurement costs result in cash flows for the hotel. In fact, if the function of acquisition is not managed adequately, the hotel ends up being susceptible to cash flows. This is done by negotiating payment terms with suppliers, and to build an effective supplier relationship.

Impact of Covid-19 on the Global Hospitality Industry

Coronavirus, carrying the status of a pandemic globally, has led to a global crisis, affecting the hospitality industry potentially more than those of 9/11, SARS and the financial crisis. The hospitality industry has never experienced such a crisis, putting humans in the centre of the global situation. Covid-19 generates deep anxiety, creates panic and uneasiness, confusion and impacts people both mentally and physically, an emotional way that the people of this generation has never felt.

Image taken from: https://www.phocuswire.com/coronavirus-global-hotel-strategy-part-2

The impacts of the crisis have reached every industry on a global scale, with airline, tourism and hospitality taking a heavy hit. According to data provided by OAG Aviation Worldwide, the travel ban on international flights have caused the global airline industry losses amounting to $880 billion. The travel and tourism industry is also under immense pressure with many hotels to cease operations partially or entirely, including its restaurants, cafes and bars. Hotel owners and operators are suffering tremendous revenue losses. As the phrase “social distancing” becomes a new normal, many people are staying home more often, while some attempt to continue typical daily activities through restrictions. Some cities implemented full lockdowns, and this created an uncertain business climate for bars, cafes and restaurants.

The Implications to Hotel Procurement

Covid-19 has severely disrupted supply chains globally. Procurement leaders needs to maintain business operations, fulfil urgent requests, and soothe supplier challenges against the significant disruption to their businesses, people and communities. Procurement leaders have also focused on their initial efforts on managing the supply disruptions from suppliers.

Procurement leaders also have to concentrate on their initial efforts on managing upstream supply disruptions from tier 1 and tier 2 suppliers, rebalance their short-term sourcing decisions and turn their focus to medium-term to secure the supply base and building future-proof resilience. This approach will help manage the immediate emergency of Covid-19 and also build stronger and more resilient businesses as economies return to normal.This pandemic has also exposed the vulnerabilities of companies and industries, especially those who depend on China to fulfil their need for raw materials and finished products. China’s dominant role of the world’s factory means that any major disruption puts the supply chain on a global scale at risk.

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Jeremy Ng, DPSM
Jeremy Ng, DPSM
Jeremy Ng has substantive years of experience in the food, beverage and hotel industry, performing leadership roles leading and supporting project, operation and procurement management specialising in contracts, compliance management, sourcing and tendering process. He is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). He completed the Diploma in Procurement and Supply Management (DPSM) on June 2020 at SIPMM Institute.
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