How Does Hotel Supply Chain Work?

Introduction

Ever wonder how hotel supply chain works?

Say the hotel you work at, or frequent, needs more towels. You might think it’s as simple as the hotel management logging in to the website of the vendor to place an order; or calling some “supplier”. But in fact, it’s so many layers of more complicated than that.

Let’s take a tour. Surprisingly, it all starts with the owners….

Hotel Ownership

Research shows that 75% of hotels in the US are franchises.

When it comes to hotel franchises, entrepreneurs, who are not necessarily hotel experts, will pay a national hotel chain to use their brand name, logo, and management protocols. The main hotel is owned by shareholders who also don’t necessarily know much about hotel management. They are concerned with making a profit. So, for this reason, hotel franchises additionally own other brands under them.

For example, Hilton Hotel, a public shared company, has hundreds of shareholders, like The Vanguard Group and Harris Associates LP. The hotel conglomerate officially owns 15 brands, such as Conrad Hotels & Resorts, Hampton by Hilton, and DoubleTree by Hilton. These hotels are franchised by Hilton to entrepreneurs and institutional investors.

Another example would be Marriott – a public shared hotel itself – that also manages and franchises hotels. But the main shareholder, who owns 25% of the company, is actually the Marriott family. The hotel has 30 other brands under it, which are mostly lodging facilities and hotels.

In smaller hotels, owners are mostly the managers of the facility. But this is not the case for hotel chains.

Hotel Management

Looking closer, we see that when an entrepreneur or an institutional investor buys a hotel franchise, they usually hire a hotel management company to run the operations. It takes great expertise in hospitality specifically for a hotel’s day-to-day to be successful, and it’s wisest to let the experts handle it.

After vetting a prospective hotel management company, hotel owners would look to sign an HMA (Hotel Management Agreement). This contract usually includes provisions like:

• Owner relinquishes all the operations to the management company.
• The management company will collect all the revenue.
• Pay all the expenses.
• Be experts of housekeeping standards – and then be able to monitor, hire, fire, and maintain to keep those standards.
• Be familiar with, and execute the highest standards of FDA hygiene, cleanliness, and health across all areas of the hotel – especially food-related.
• Perhaps most importantly, operate and upkeep front desk and bookings.
• Finally, they submit the profits to the investor (after deducting their fee).
• The investor (is then usually responsible to) pays taxes and other financial obligations before subtracting net.

Hotel Supplies

This is where the fun begins.

Sourcing of supplies for hotels can be a lengthy process that starts with multiple bids by different vendors. The management company wants to make sure they buy quality products at the lowest price to keep operational expenses low. Some management companies will prefer to work with one supplier that provides a one-stop-shop for all hotel supplies, but we all know how big companies can be about the little stuff. So for the details that make or break a guest’s stay – like the effectiveness of the lock on their door handle! – good management usually rely on the hardware specialists.

… and That’s Where We Come In

A malfunctioning hand dryer can turn guests away, and with hundred of rooms, hotel management doesn’t usually find out until the guests are already upset. That’s why hotel management needs to be able to source quality hand dryers, door viewers, door bumpers, door seals, door guards, wastebaskets, and paper towel dispensers, among other hardware – at the drop of a hat.

Hospitality suppliers, like here at Archmaster, know the devil is in the details, and strive to service each manager individually, and on a moment’s notice. That’s why we package each item we send – even when it’s in bulk – with a personal touch, and prescribe it to a room number so your job is easier.

*Given our current circumstances, Archmaster is supporting the hospitality community by offering 30% off all your orders until the end of May. Let’s stay safe and unified!