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Tradavo Advice

The 5 Most Painful Mistakes Made by Hotel Retail Managers - Part 3

Posted by Bobby Martyna

Mon, Oct 11, 2010 @ 17:10 PM

Painful Mistake #3 - Using your Buying Group for Hotel Retail Purchases

This is a very common, but painful mistake.  Buying Groups, also known as Group Purchasing Organizations (GPOs) are a very well considered concept for purchasing many items for hotels -- including furniture, fixtures and equipment, and in some cases, food service items.

They fall far short of the mark for wholesale purchases for your market, pantry or gift shop.

Here's why. GPOs operate by putting a particular category out to bid, and then selecting the low price vendor.  But to win the business, the vendor must offer "allowances" to the GPO, only a percentage of which is passed back to the hotels.  The vendor knows this, and so offers a price which includes the 'tax' required by the GPO.

The upshot of that model is that the hotels are not getting the lowest net price.  Additionally, the vendor is 'locked in' for the contract period, often a multi-year agreement.  So there is little or no incentive for the vendor to continually lower prices.  There is also a prohibition against the vendor offering promotions or other rebates without those first being washed through the GPO, losing a good part of their value in the process.

A far better model is for the wholesale distributor to offer the lowest net price and to be incentivized on a daily basis to continue to earn the business of the owner/operator.  To earn that business requires constant attention to detail, continually lower prices and a superior level of service.  Part of running a retail operation is knowing what products to carry, how to display them and how to price them.  A vendor that is incentivized will provide these services freely and frequently, rather than viewing them as a cost of doing business.

Tradavo offers the lowest prices in the industry because we do not utilize a GPO model, nor do we sell through a GPO.  Consider us the Wal-Mart of the industry -- low net prices, but with regular promotions.  By providing the lowest prices and the highest service levels -- AND by having to earn each one of our customers with every transaction, we are incentivized to continually improve.

As a result, our customers see demonstrably higher sales and profits in their retail operations than any alternatives.

Let us prove that to you, as we have to more than 2,000 other hotel retailers!

As always, please contact me or our sales team for more details -- we love to speak with current customers and prospective customers as often as possible.

hotel owner purchasing wholesale products from Tradavo

Bobby Martyna
President and CEO
Tradavo, Inc
bmartyna@tradavo.com
@bmartyna

Topics: hotel pantry, hotel supplier, wholesale snack distributor, Bobby Martyna, Tradavo CEO