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As a hotel operator, you’re under pressure from all sides with rising costs, labor challenges and complex procurement processes. A hotel group purchasing organization (GPO) can help. With the right GPO partner, you can access better prices through economies of scale, a wider range of suppliers and more efficient decision-making.
Beyond those favorable, negotiated prices, many GPOs also offer procurement analytics, supplier management and strategic sourcing solutions that improve performance.
Read more: What is a GPO? (Plus 8 myths and facts)
Take a look at your highest operational costs, and it’s likely hotel food purchasing is at the top of your list. It has become one of the most important aspects of profitability, and it’s also tied deeply to customer satisfaction. But with the increase in food prices, supply chain disruptions and supplier price fluctuations, it’s harder for hotels to provide quality products within budget. Whether you manage an individual property or a group of properties, your hotel business needs a strategy to ensure effective purchasing at affordable prices.
That’s where group purchasing organizations for hotels can help. They consolidate the purchasing power of many hospitality organizations, allowing them to secure better supplier contracts, pricing conditions and procurement processes. Some organizations also offer assistance in procurement, supplier management and food purchasing analysis.
In this guide, we will discuss the best hotel food purchasing organizations and the criteria for choosing the right procurement organization for your business.
Purchasing organizations for hotels play an important role in reducing purchasing expenses through volume purchasing and negotiating better purchasing arrangements. In this section, we will explore the function of purchasing organizations for hotels, the services they offer and the reasons most hotels become clients of a food purchasing group.
Hotel GPOs help hotels improve their procurement process by aggregating the purchasing power of several companies. Rather than negotiating purchasing contracts individually with different suppliers, participating hotels benefit from pre-negotiated contracts from manufacturers and distributors of food and other supplies. In this case, hotels can enjoy favorable prices, consistent purchasing processes and simplified supplier relationships.
Unlike food distributors, GPOs are not involved in the direct sale of goods. The main responsibility of GPOs is negotiating contracts, forming supplier networks and offering procurement services that help hotel businesses make more strategic procurement decisions. Some hotel GPOs also provide procurement analytics, contract management and culinary advisory services.
Among the many advantages of having a GPO for hotels, two of the top reasons operators choose a GPO partner include simplified procurement and centralized contracting, with contracts available to clients. Therefore, rather than dealing with different vendors individually, hotels can procure using available contracts, which helps ensure competitive pricing.
Some of the advantages of GPOs for hotel procurement are:
Read more: The right partner makes the difference: Dimension Hospitality on getting started with Entegra
By joining a food purchasing group, hotels improve their purchasing effectiveness while minimizing procurement costs. Hotels benefit from the purchasing group because it enables them to take advantage of supply agreements that would not be possible without joining the larger group, helping them develop a more consistent purchasing budget.
Some of the main reasons hotels opt for a food purchasing group are:
Less expensive food purchases
Read more: Choice Hotels partners with Entegra to launch a new breakfast program
Not all hotel group purchasing organizations provide the same kind of procurement assistance. Understanding the different types of GPOs available to hotels can help you choose the best option for your business needs.
Not all hotel group purchasing organizations are created equal. Every GPO's role is to help hotels reduce costs by negotiating supplier contracts; however, the services they offer vary widely. Some GPOs specialize primarily in food service, while others provide broader procurement services such as spend analysis, supplier management, contract management and strategic advisory services, such as culinary optimization.
Therefore, when choosing a procurement partner, hotels must consider not just price but many other important factors. The right solution will make your purchasing process more efficient, build supplier relationships and contribute to business performance.
The appropriate procurement partner will be determined by various considerations like the size of the hotel, the number of purchases, supplier needs and overall business goals. Some hotels might require access to negotiated prices, while others will require a more integrated procurement approach that combines purchasing programs, procurement spend analytics and culinary advisory support.
Read more: How Heritage Hotels and Resorts protects brand consistency with Entegra
When selecting a group purchasing organization for food service, it’s important to consider more than just price. Operators often consider factors such as distribution network, contractual coverage and buying capabilities.
Choosing among group purchasing organizations for food service requires more than evaluating potential cost savings. The hotel needs to determine whether the GPO aligns with its procurement requirements, business setup and future objectives. To find the right partner for you, look for a GPO that integrates competitive procurement agreements with access to suppliers, procurement flexibility and procurement performance improvement services.
Additionally, it’s important to evaluate the scope of the contract, reporting capabilities and the support services a GPO program is offering.
Read more: How Accor partners with Entegra for successful hospitality procurement
A wide supplier base makes it easier for your hotel to be flexible, rather than depending on a fragile network of just a few suppliers. That’s why it’s essential to determine whether a GPO offers access to suppliers at the national and regional levels, particularly for hotels that require consistent procurement in various locations but also need to buy some items locally.
When choosing a GPO, reviewing what it offers can help you make the right decision for your hotel. Consider the following aspects:
Related: 7 cost trends hotel operators should watch
Many group purchasing organizations in food service add value not only through negotiated pricing but also through procurement analytics, digital tools and strategic culinary advisory services. This can help you better understand your spend, spot opportunities to reduce costs and make better purchasing decisions across departments.
Additional services that might be valuable for hotels include:
Read more: Culinary services & solutions from Entegra Culinary Consulting
Partnering with a hotel food procurement group can help you reduce costs. It can also help you streamline your procurement process, which in turn improves operational efficiency.
Being part of a food purchasing group can help your hotel improve its financial position and procurement procedures. Rather than spending your time focusing on cutting costs, a hotel GPO partner simplifies the whole purchasing experience, including managing supplier contracts. By reducing complexity, you can ensure purchasing consistency across multiple departments or properties.
When you join a GPO that negotiates supplier contracts on your behalf, you tap into the collective purchasing power of all the members of that GPO. This greater volume of purchases enables GPOs to get better prices and contract conditions than hotels might get on their own.
Some of the key financial advantages are:
Related: Who's watching your back? How a GPO can help you reduce costs
Centralized procurement is less complicated because it means fewer suppliers and procurement agreements to handle. Uniform contracts, combined purchasing plans and an effective procurement process will enable hotel staff to devote less time to administration and more to operational activities.
Some additional operational benefits a GPO can offer include:
Read more: Doing more with less: The operational efficiency guide
While not every type of hotel may find the use of a group purchasing organization appropriate, most hotels see major benefits from partnering with a GPO. By understanding the types of hotels GPOs typically serve, you can identify the partner that’s the right fit for your hotel’s needs.
A GPO can provide considerable value for many types of hospitality businesses, but the suitability of a particular organization depends on each hotel's specific purchasing and business needs. When your hotel has high purchasing volume, many departments or or multiple properties, having a GPO can help you simplify the procurement process. However, independent hotels can also benefit from a GPO’s access to supplier agreements, elevating their procurement expertise without increasing the size of their purchasing department.
Before entering into an agreement with a group purchasing organization, a hotel has to consider how well the GPO’s services align with the hotel's procurement policy.
Related: How you can improve efficiency with a hospitality procurement company
Although any hospitality enterprise could benefit from purchasing process improvement, some hotel operations can realize even more value by joining a GPO because of the complexity and volume of their purchasing.
A GPO tends to be particularly appropriate for:
Related: How efficient hotel procurement can help you reduce costs
In choosing procurement partners, take into account:
Read more: Why Entegra? Choosing the GPO that's right for your business
While minimizing food costs is important, the right procurement partner offers so much more. The best group purchasing organizations for hotels are those that help you improve your purchasing strategy, build better relationships with suppliers, streamline the procurement process and ensure operational consistency. Evaluating factors like supplier coverage, contractual options, procurement support and long-term scalability can help you choose the right solution for your business’s needs.
Many hospitality companies can benefit from having a procurement partner that offers negotiated purchasing programs. Unlike other procurement partners that operate as suppliers, Entegra provides strategic assistance to businesses through optimized procurement and operational consistency.
Contact Entegra today to learn more about how we can support your hotel's procurement goals.
Group purchasing organizations for hotels use their collective purchasing volume to negotiate agreements with suppliers. This allows hotels to benefit from better prices, increased consistency in purchases and improved procurement performance.
Yes. A food purchasing group can help independent and boutique hotels create supplier agreements, streamline purchasing and control costs, all without having to hire a dedicated procurement team.
Many group purchasing organizations in the food service industry provide procurement analytics, spend reporting, supplier management, implementation support and strategic sourcing to improve long-term purchasing decisions.
Yes, since standardized contract terms and centralized purchasing allow the hotel company to conduct procurement activities consistently at different locations. Entegra also facilitates the development of scalable procurement policies.
Hotels should compare supplier coverage, contract flexibility, reporting capability, implementation assistance, buying categories and scalability when choosing among hotel group purchasing organizations.
The best procurement partner will simplify the purchasing process, build better supplier relationships and enhance efficiency. Entegra provides negotiation, purchasing services and strategic procurement services for hotels.
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