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Prolonged travel ban and extended lockdown because of COVID-19 have had a multifold impact on the hospitality industry. It has not just adversely impacted the room supply and revenue but massively disrupted the supply chain of hotels, which are majorly dependent on foreign countries for essentials.
Much like other hotels, InterGlobe Hotels (IGH) has been facing several hurdles in procuring essential goods and services. Arun Raju, VP & Head of Projects, InterGlobe Hotels, says, “Our hotels get a lot of our material supply from China and Europe. Orders have been placed. Unfortunately, the shipment has been postponed for some time now. They supply is likely to remain impacted for a while and would affect our timelines and construction schedule.”
Since the hotel has been closely monitoring the situation, IGH was quick to respond the very moment this pandemic impacted their business. “We started to look at locally sourced materials for interior items, along with the furniture, fixtures and equipment. Since the logistics and supply chain has been put on hold, it will impact our whole procurement cycle by over three to five months. We have taken the steps within our control to ensure business continuity.”
IGH has been in constant touch with our material suppliers and vendors, and all measures are being taken from both sides to minimise the delay and be ready for the projects to resume on sites.
Bringing down the cost of operations
A challenge the hotel group faced was cash conservation, as capital availability remains constrained given that there is no business. “Due to the weakening of Indian rupee, the imported items have turned more expensive for the Indian developers. Keeping this in mind, our first step was to implement a volume-based ordering system where we tried to club orders for multiple hotels to drive volumes and ensure the best available rates,” says Raju.
IGH has approached their vendors to renegotiate the pricing on all regular packages to ensure that they can tie together the best available prices in such tough times, necessary to save cost and procure the best quality of materials.
One-stop solutions
Raju contends that most hospitality groups, including theirs, would move to a one-stop solution, under which a hotel company will not engage with multiple vendors. Instead, they will connect with a single system-oriented solution provider for all needs: HVAC systems, security solutions, F&B processes of production, waste management, to name a few.
“The purchase trends are likely to be more B2B (business-to-business) instead of B2C (business-to-consumer). We expect more engagement with consultants and system providers, who would further connect with vendors to secure goods and materials. Also, we could see more virtual expos, more online forums, e-catalogues, and more scope for locally sourced materials as many companies would be cautious in ordering from foreign countries.”
The learning curve
The last few months since lockdown has been a learning curve for them, muses Raju. “We would be required to look at many other aspects, including risk assessment, vendor profiling, sanitisation and hygiene of the ordered materials and all necessary storage, warehousing and logistic procedures.”
There is a need to document a detailed Standard Operating Procedure (SOP) for this procurement cycle, which should begin from the initiation of a requirement until the delivery of the material to the site. “We expect changes in contract clauses, timelines and strict hygiene procedures with strict monitoring to be put in place. These should be continuously discussed, updated and the learning should be shared across all forums,” he adds.
Based on the challenges and experiences gained by the team during the COVID-19, the hotel group is planning to map them into opportunities. “While previously we had manuals and SOPs for hotel operations, site safety, projects, company travel and more, the pandemic has allowed us to relook at the guidelines and update them according to the changing scenario,” says Raju.
The hotel is now engaging with stakeholders and relooking at their SOPs with a strong emphasis on hygiene, sanitisation and adequate safety standards. “This would include packaging, travel, storage and off-loading. We need to ensure the health and safety of all our employees at the site and our vendors.”
