Page 2 - There's NOI in Team - SIB Hotel Industry Whitepaper

The harsh reality is that there are hidden expenses within all property management operating costs that can be reduced if organizations could only put the right people on the sidelines.
But even the best players can’t win it all by themselves.
The harsh reality is that there are hidden expenses within all property management operating costs that can be reduced if organizations could only put the right people on the sidelines.
Well-run businesses are susceptible to a litany of unnecessary costs resulting from factors like over service, local and regional expenses not covered by GPOs (Group Purchasing Organizations like Avendra, IHG Group Purchasing and Hilton Supply Management), and poor pricing relative to what’s available in the market.
The latter is understandably a point of pride for most companies since the ability to leverage negotiations is a valuable, admirable skill. Unfortunately, even the best negotiators can fall short for the simple fact that they don’t have a data sample large or diverse enough to make informed decisions at the level necessary to achieve a bottom-dollar price for the services rendered.
Sure, there are many that know a great deal about the hotel business. However, the same vendors that install phones in hotels install them in airports or shopping malls or sports arenas. At the end of the day, costs are still costs. Comparing them only to your industry is akin to anointing Kobe or LeBron as the greatest basketball players of all time, yet only comparing them to those playing basketball today.
Furthermore, organizations often view negotiated discounts and GPO pricing as one in the same. That can be a dangerous mistake. Plenty of good companies take their eye off the ball, assuming that everything they need is covered under their GPO. But understanding what isn’t covered by a GPO is just as important as knowing what is. On top of that, it’s imperative that companies carefully audit vendors to ensure that they are being billed according to GPO pricing. If no one is reviewing each invoice, in detail, for billing accuracy, then leakage is inevitable. And it can be costly. In the vast majority of cases, vendors aren’t trying to make mistakes; they just happen. And if you aren’t aware of where to look for them, then you’re setting yourself up for failure.
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