By Babita Krishnan
Procurement, or purchasing, is the process of selecting suppliers and signing contracts for the purchase of goods and services by a business; and procurement consulting is a professional service provided by people who have extensive experience and expertise in the various aspects of procurement. In a hotel development project, the chance of costs running amok is very high and hence a greater need for a control mechanism to be in place — ideally provided by a procurement consulting firm.
Of the many specs that make up a hotel project, the one that the guests experience the most (second to service of course!) are the furniture, fixtures, and equipment, also known as FF&E, though the acronym hardly seems adequate to describe such an important part of hotel development. Furniture, fixtures, and equipment can make or break the guests’ experiences — and the budget. Cost overruns and time delays are typical in the FF&E purchasing process, and mismanagement of procurement can even set back the opening of the hotel. It becomes essential to approach this process with a strategy to maximise resources and prevent or prepare for the common roadblocks in purchasing. An organised, efficient procurement consultant makes a world of difference in this process.
One needs to ensure frequent and detailed reporting, have transparency in the FF&E purchasing process, in case of a setback one needs to know how will it will be resolved and make adjustments as needed, choose trustworthy vendors, ask the designers…the list is endless. Or one could choose the easy and more effective option of partnering with a procurement company or consultant who has an extensive library of established vendors, to carry all of this out for you.
The entire process is extremely time sensitive as FF&E is not just about one element. From design all the way down to installation, it is a process with many steps. To understand the need for a procurement consultant, Hotelier India met up with Alan Benjamin, president, and Suprio Ghosh, MD, of Benjamin West, a leading global FF&E and OS&E purchasing firm for the hospitality industry that has earned a reputation for cost-effective, industry-leading results. Through its vast network of resources and relationships, Benjamin West manages to deliver tremendous value to its global client base. “By demonstrating accuracy, integrity and reliability in each project, Benjamin West has earned an unparalleled reputation,” says Alan Benjamin. “Our goal is to create a process through strategic supplier relationships where Benjamin West can quickly manage the opening and renovation OS&E procurement both on time and on budget,” adds Suprio Ghosh.
Benjamin West has, as a firm, successfully completed more than 2,600 hotel projects around the globe — from selected service properties to luxury boutique properties. Its largest corporate clients include Host Hotels & Resorts (handling projects around the world); FelCor, Omni, Apple REIT, JHM, Watermark, Chatham Lodging Trust, Chesapeake REIT, Diamond Rock, Extended Stay for Blackstone/Centerbridge/Paulson, Starwood Capital in Europe, and many more around the globe. Benjamin West is also handling one of the largest new construction projects in the world — it includes 26 hotels of every major global brand and over 13,000 rooms, for Jabal Omar Development Company in Makkah, Saudi Arabia. “We have worked in 30 countries and our current FF&E spend is over US$1.7m per day,” reveals Benjamin. While the firm has state-of-the-art purchasing systems and accounting procedures, it credits the staff around the world with the success, who “with their incredible passion and commitment make it happen every day, on every project”. The India operations that began in July last year, have already started making inroads with a very positive response. (Though Benjamin feels the biggest challenge he faced in India was not “which procurement consultant to hire” as in the US, but “why do I need one”!)
Even as the industry becomes aware of the need to hire consultants for procurement, we get Benjamin and Ghosh to reveal some more:
Why does one need to hire a procurement consultant?
Alan Benjamin: Though there are many reasons to hire a procurement consultant, I can tell you why you would hire Benjamin West. We have a huge buying power as we handle more than 2,200 vendors. We completed over 450 hotels in the last business year as compared to any large developer who would do a few in any given year. We leverage our huge cache of knowledge, including design knowledge. Along with our ability to engage with the stakeholders to fully understand the existing building and its possibilities. We work closely with operator and the ID Consultants to deliver the new vision.
How are you different from a procurement company?
AB: We work as a fiduciary agent and all the processes run on a proprietary software called RPM (Revolutionary Purchase Management) that is absolutely process-driven with “best in class“ and we follow this globally. Thus, we have everybody on the same page and the client has access to all the documentation and we help them take an informed design decision.
In a hotel development project, where would you place yourself in the hierarchy?
AB: We are the bridge between designer and vendor, and work as eyes and ears for the client with the sole objective of time and cost integrity while maintaining the quality.
You have a presence in 30 countries, is your procurement network also global or do you concentrate on local vendors?
AB: We try and get the best possible solution by mixing local and international vendors for each project.
How different is the Indian client?
AB: Indian client is very well-informed and well-travelled, who also recognises a need for procurement consultancy and quiet open to new ideas.
Since it is a fairly novel concept in India, what is your strategy to take this forward and create awareness?
AB: India remains one of the world’s hottest hotel development markets, which we believe will continue for the foreseeable future. This projected growth compelled us to open our fourth international office to provide on-the-ground service and support to our clients. Every country has its own specific customs and regulations for purchasing. Our staff there has extensive purchasing background both in terms of specifying/regulations and local, regional and international sourcing.
Suprio Ghosh: Over the next decade, India has vast development potential that is just beginning to be realised. The economy has enjoyed robust growth for 20 years, and the outlook remains positive. As the economy expands, demand for quality, branded hotels will rise.
Tell us something about the ‘Benjamin West’ advantage.
SG: We have a proven track record of working with all the major brands, most of whom are active in India. Benjamin West is one of a handful of firms globally approved to handle Hyatt’s FF&E and OS&E purchasing. Our well-established relationship with Marriott-branded properties includes over 575 properties around the world, having provided purchasing services to more than 20 per cent of all Marriott hotels in the US and 15 per cent of all Marriot properties worldwide. We look forward to continue expanding these brand affiliations and this experience is what is now in India as well.
Which properties in India are you presently working with?
SG: The New Delhi office began with an initial assignment for SAMHI that is developing five new-build hotels under the Marriot and Hyatt brands. The hotels under agreement include: 178-room Hyatt Place, Gurgaon, 171-room Courtyard Marriott, Bengaluru (Outer Ring Road), 161-room Fairfield by Marriott, Bengaluru (ORR), 153-room Fairfield by Marriott, Sriperumbudur, and 148-room Fairfield by Marriott, Bengaluru (City Centre). We are also doing a high-end resort at Cape Weligama in Sri Lanka with 37 Villas for Dilmah Tea.
