Taking Stock

It makes perfect sense: leverage the power and expertise of the hotel industry's largest procurement company and offer a value-added proposition — comprehensive consulting services conducted by experts with operational expertise and deep knowledge of the hospitality industry. Avendra, with more than $2 billion in customer spend, now claims to help clients save an annual average of $375,000, or 2.2 percent in expenses and related costs per hotel, with its newly created consulting service, Avendra Services Group (ASG).

The new consulting group helps hotels identify opportunities for savings, efficiencies and, importantly, increased profitability.

“Today's strong occupancy and RevPAR outlook shouldn't overshadow the importance of focusing on managing costs and monitoring labor productivity,” says Brad Lillis, senior director of ASG. “These activities are critical to improved bottom-line results. Through ASG we are actively working with interested owners, franchisees and hotel properties to implement strategies and tools that will maximize their profitability.”

ASG is focusing its efforts on five key areas within a property's food and beverage department: labor cost management, product substitution consulting, specification development and compliance analysis, menu analysis and food safety.

Operational consulting encompasses revenue enhancement (sales, marketing and promotional activities, menu price benchmarking, dining experience) and food cost improvement (product price management, product application, waste and yield, and labor effectiveness). ASG's fee-based consulting is available to both existing customers and new clients who aren't currently purchasing from Avendra's procurement programs.

On one recent project, Avendra worked with Hyatt Hotels Corporation on its corporate directives project. Hyatt wanted to review and evaluate each of its current specs and create a program that was consistent across all its properties.

Avendra evaluated each of the company's specifications, from smoked salmon to salad dressings, and made changes where appropriate. It also shared its expertise on which products might work best for Hyatt in the context of its overall brand strategy.

Also, Hyatt was looking to find an alternative to its spec administration process, which featured a paper system with thick binders at each property. The laborious process for managers to keep the manuals up-to-date was replaced by putting all Hyatt's specs online at one location at myAvendra.com.

FRESH EYES

On another recent project, Avendra worked with the Hyatt Regency Grand Cypress in Orlando to identify opportunities for the large luxury property to improve the profit contribution provided by the hotel's f&b operations without sacrificing product quality or service, as perceived by the guest. The project included methodologies such as an on-site, first-hand observation of the hotel's f&b operations, an analysis of f&b items purchased, a “mystery shopping” experience at each of the hotel's f&b outlets, and local market price benchmarking and menu analysis.

Paul Tang, vice president and managing director of the Hyatt Regency Grand Cypress, recalls, “Our property was already doing very well in the f&b area. In 2004 we had seen solid revenue and profit increases in f&b, so I was very interested and somewhat skeptical about the potential for savings in the project. However, we were incredibly pleased with the project results — the analysis and recommendations ASG provided were insightful, tactical and actionable. As we implement all of the recommendations, we expect to see in excess of $900,000 annualized savings.

“Further, we were very impressed with Avendra's food safety expertise,” says Tang. “They initiated training that enhanced our food safety processes. Finally, Avendra's efforts were not simply ‘cost-cutting.’ Their comprehensive review included recommendations on how to better market many of our programs, drive sales and make an even more successful operation.”

Lodging Hospitality recently visited the Hyatt Regency Grand Cypress and accompanied ASG Director and hotel industry veteran Herman Schumacher around the bustling property as he recounted the consulting experience.

Schumacher emphasized that the consulting process requires a significant commitment on the property's part weeks prior to Avendra's on-site visit, in terms of providing comprehensive pre-work data and other relevant information for the ASG team to compile, organize and analyze. It's a team effort. Hotels can also choose consulting services as a total package covering multiple departments or to examine a specific area only, such as labor.

Following the data compilation and analysis, a team of ASG associates visited the hotel for one week to observe the operations and make detailed recommendations. Recommendations aim to be realistic, with a 30- to 90-day goal for property implementation.

For example, in the area of food costs, the Hyatt Regency Grand Cypress had a hugely popular offering with its crab cakes. But ASG found that the hotel wasn't procuring the most cost-effective product. The hotel was specifiying jumbo lump crabmeat, the highest price-per- pound crabmeat, then breaking it down into smaller pieces when forming the cakes. ASG suggested it simply buy a lower-cost backfin crabmeat, which comes in smaller pieces, therefore saving significant money while retaining a high-quality menu item. It might not seem like a big deal, but these kinds of changes add up to significant savings.

Of course, says Schumacher, “the results are only as good as you apply them. One can't put the report in a drawer and expect improvements. Attitude is key. Paul Tang took the results to heart and ran with it.”

“It was a great experience, both constructive and positive,” says Tang. “Our managers were open-minded and willing to apply new initiatives. It's always good to get a fresh set of eyes on one's operation.”


Go to www.LHonline.com for more information and related articles.

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