Like all industries, hotel owners and managers are now learning how to use the Internet to better their businesses.  Product procurement is one area where the Internet is sure to benefit the hotel industry because

• hotel managers are constantly looking for ways to reduce expenses and enhance productivity
• products and suppliers are changing faster than ever before
• with industry consolidation and brand re-positioning, chain-wide standards and requirements are changing frequently
• the new generation of staff and managers want to use the latest technology available

�HRG was able to conduct this study because our affiliate, PKF Consulting, has been researching the hotel business for nearly 90 years, and because of our extensive database of hotel financial statements,� according to R. Mark Woodworth, Executive Managing Director of HRG.

Among the findings contained in the whitepaper are the following:

• Hotels in the U.S. spent an estimated $2.89 billion during 1999 on operating expense items, such as guest supplies, linen, china, and office supplies.

• U.S. hotels ordered an estimated $2.51 billion in non-capitalized furniture, fixtures, and equipment (FF&E), and another $3.85 billion on capitalized FF&E during 1999.

�By segmenting the data into a variety of product categories, a hotel operator has the opportunity to compare their property�s procurement expenditures against the average for other hotels of similar marketing orientation and geographic location,� says Corgel.  �This is becoming a crucial model for hotel managers given the strong desire to use the Internet for supply-chain management.�

The HRG projects average occupancy for the 44 major U.S. cities it tracks to increase only from 70.4 percent in 1999 to 70.6 percent in 2000.  HRG also sees room rate growth flattening after several years of record jumps � all this leading to revenue growth only slightly ahead of inflation for the next few years.

�Entering a period of flat revenue growth, hotel managers and owners will place a new emphasis on the fundamentals of hotel operations � meaning cost controls.  Everyone will be keeping an eye on the fine points of the procurement market,� Corgel added.
 

The Hospitality Research Group (HRG), headquartered in Atlanta, is the research affiliate of PKF Consulting, the international consulting and real estate firm specializing in the hospitality industry.