STAR BRIGHT

Chris Durant, head of the largest purchasing consortium for the UK independent hospitality industry, talks about why it’s important for Beacon Purchasing to raise its head above the parapet, and why those who buy need to know their customers first.

Beacon Purchasing has been around for quite some time. In 2010, we will be celebrating our tenth anniversary. In fact, we have a legacy to uphold that stretches much further back.

Beacon was born out of the merger ten years ago of the purchasing departments of Best Western and Consort Hotels, two great hotel consortiums that decided to join forces. Our marque is actually inspired by the first syllables of each of these brand names. Now a subsidiary of Interchange & Consort Hotels, Beacon shares the same parent company as Best Western GB, part of a global brand of around 4,000 hotels worldwide.

Helping independents compete

Our mission is to help independently owned businesses compete more effectively with their larger competitors. How do we do this? Through our collective buying power, and the knowledge and expertise of 40 experienced staff in our York headquarters and out in the field. These include skilled buyers, sales development managers, marketing experts and customer service professionals. Together, we help negotiate better prices and terms for our members, adding to their efficiency and profitability.

Altogether better: Best Western and beyond

While all 280-plus Best Western hotels in the United Kingdom are members of Beacon, our membership covers much more than that.

We have 2,000 members, including hotels, restaurants, leisure, camping and caravan sites, visitor attractions, pubs and clubs and care homes. We work hard to secure the best deals from our 130 suppliers for all of our members, whether the likes of Glenapp Castle in Scotland, a Relais & Chateaux country house hotel, or Chester Zoo.

Our suppliers -- and we have both large and small ones -- offer products and services in five categories: food, drink, housekeeping and consumables, utilities and services, and refurbishment and maintenance. From tableware to cleaning care, and from draught beers to chandeliers, we like to say! But our suppliers benefit too, since we provide them with a specialist and cost-efficient approach to delivering sales growth through exposure to our membership base. Working together as a team, we – Beacon, our members and suppliers – can achieve much more for our respective businesses.

Rising to the challenge

Two years ago when I first joined Beacon, the company was already successful although there were certainly challenges. Like any business you cannot simply assume it is going to carry on forever being successful. It was a matter of looking at the business strategically to say where is this business going, where can it go, and what do we need to do not just to sustain the business but to take it to another level? Historically, Beacon had been somewhat hidden. It had to shout a little louder, offer something more.

Circumstances in the market called for it. In turbulent economic times, people had started to look for even greater value, and this was something we knew we could provide very well in a number of ways.

This is one of the reasons why we launched the Beacon Supplier Awards, now on its second year. We wanted to give members the opportunity to recognise the best suppliers, and to encourage suppliers to continue delivering the best possible products and services. We have also created beacongreenhotel.co.uk, an on-line virtual hotel featuring practical and commercially viable tips to help hospitality businesses become more sustainable as well as a quarterly newsletter called ab (an abbreviation of our strapline ‘altogether better’), featuring members, suppliers and new trends and products.

To-date, the business has grown very much through our standard membership model whereby members join Beacon, pay a membership fee and enjoy access to all these suppliers that we have special deals with. But there is a lot more we can do for clients, and we have developed a much more flexible approach. An off-the shelf model suits some but not everybody. Our members range from small independent operators to groups of businesses, and we cannot just group everybody together, give them the same solution and think it is going to work.

Consultancy helps

I have a mindset that comes from my background in consultancy. Prior to joining Beacon, I had worked for a number of years as a management consultant to hospitality companies or businesses with large hospitality operations such as the BBC, Barclays and Standard Life. Then, consultancy was still a relatively new discipline within the industry. I found that organisations were spending millions of pounds a year on their catering without having a clear strategy in place or a real understanding of how to get the best from their contracts.

As a consultant, I essentially advised organisations with employee catering on how they should approach these services, and how to manage their contractors better and get the most out them. In many instances it was about saving costs but in many more it was about getting best value.

So at Beacon I set out to take this more consultative approach with customers. Rather than saying here is the solution, Beacon would advise them that we offer a complete toolbox of solutions to dip in and dip out of once it was understood what the customer was looking for. And once we had understood the customer’s business objectives, we could then work with them more closely towards achieving them.

A business that happens to be purchasing

Whilst I have had personal experience of purchasing throughout my career, as part of managing food service operations for blue-chip companies or running hotel food and beverage operations, I did not join Beacon as a buyer. My role has been to run the business, which just happens to be purchasing. I am fortunate to have brilliant management colleagues and a fully committed team to help me.

But without doubt, my background in hospitality helps when I talk to both current and potential customers about their procurement needs. Hospitality has given me very useful and flexible skills. Having both a hospitality management degree and City & Guild craft courses under my belt, I know about working in a kitchen but also about handling balance sheets. Most importantly, I understand the way people in this business think. I understand what it is like being an operator, what it feels like to be at the sharp end, whether in the kitchen or on a restaurant floor.

New realities for luxury businesses

Having a sound purchasing strategy should be at the forefront of every operator’s mind these days. My experience has been that at the luxury end, there has been less need to focus on costs than in the middle market and the rest of the industry. Today, everybody is focussed on costs whether they are a 2-star hotel or a 5-star property.

There have been some significant falls at the top end of the market and this came as a real shock to a lot of businesses who are now forced to look at their cost base more seriously. We have seen this in our dealings with asset owners, managers or operators.

Some people associate reducing costs with reducing quality and standards but this need not be the case. Purchasing begins with the customer and understanding what it is the customer wants to buy. Luxury is what luxury means to the customer and it need not always mean a Rolls Royce. Sometimes purchasing can be driven by what the purchasing manager or a buyer believes a customer wants, but really, it should all begin and end with the customer. Only then will you be able to go out and drive the best deals possible for the products and services that people need.

All businesses, including luxury hotels and resorts, need to have a structured process to enable them to get to that point. By having the ability to look at the whole way in which their procurement is managed, they will be able to do what is necessary to improve things.

Ownership and discipline

Part of that is about ownership. Who actually owns responsibility for purchasing?

The reality is anybody who has valid authority has that ownership. But somewhere within the organisation somebody is going to ask or going to establish what the rules of the game are. How do we actually deal with procurement? How do we remove what I call the emotional purchasing out there? Too much purchasing is driven by emotion, driven by the belief of the chef, to take just one example, that he or she has got to go down a certain route. But isn’t it about what is actually needed and putting in place a process to make sure there is some discipline about what is purchased?

Flexibility and technology

For a purchasing consortium like Beacon, it goes back to the whole approach of being more flexible. We want to understand our customers and help them develop a sound procurement strategy.

This goes beyond looking at the products and services your customer wants to buy, and involves how the customer plans to manage their purchasing. One of the areas Beacon is developing now is on-line purchasing. What it does is to ensure that customers can only buy off the deals they have agreed and buy at the negotiated prices. But apart from driving compliance, it increases and hastens the turnaround and quality of information available to whoever is responsible for buying.

Arguably, this is much more applicable to group businesses. These businesses will be able to see what every hotel has purchased in every single category the previous day, rather than waiting four or five weeks down the line to see the invoices coming through by which time it will be too late to do anything about it. Such is the real value of an on-line system and why using technology in purchasing makes absolute sense.

In the end, purchasing is all about knowledge. It’s about management information. You can’t buy and negotiate the best deals if you don’t know what you buy. You can’t measure how effective your business is if you don’t know what you actually spend on. Of course, the purchase price is just one element in the profitability mix and the usual management controls and practices must be in place too.

Developing a reputation

The quality of relationships is what ultimately distinguishes one business from another. At Beacon we work hard to develop strong relationships based on honesty and integrity. We’re very transparent in the way we deal with customers. We’re there to work with them and recognise this is not just about a quick win, not just about getting a bit of business and moving on.

The only way Beacon is going to grow is by developing our reputation as a preferred partner and by acting as an extension of a hotel’s management team. We are doing that with a number of properties now, some of which are not scheduled to open until 2011! It feels good to be part of the planning process. We want our customers to focus on what they do best and let us sort out the purchasing deals for them. It is what we do best.

I know that unless Beacon delivers, day in and day out, we will not have a long-term future. We have to be constantly looking at what we do and constantly reminding ourselves that the customer is there at the heart of everything. We need to recognise this in the same way that hospitality businesses accept they have to manage their customers and their expectations. Our members’ customers have become discerning purchasers themselves. If we always remember this, Beacon’s continued visibility will be assured.

Chris Durant, Director of Beacon, is a Fellow of the Institute of Hospitality and a mentor for Oxford Brookes University’s Bacchus Mentoring Programme. To find out more about Beacon, visit www.beaconpurchasing.co.uk. You can contact Chris at chris.durant@beaconpurchasing.co.uk.