Buying power: Smart procurement fuels the guest experience

Many hospitality companies struggle with fragmented procurement processes that create barriers to innovation and limit their ability to adapt to changing guest preferences. Some companies face difficulties in maintaining consistent quality standards across properties while meeting sustainability demands, ensuring regulatory compliance, and controlling costs.

A lack of integrated systems and visibility into spending patterns can hinder strategic decisions that enhance guest experiences. By reimagining procurement processes, hoteliers can innovate, ensure quality, maintain purchasing compliance, and evolve practices to meet changing guest expectations.

“Procurement is no longer a backoffice function—it’s a key competitive advantage, allowing companies to reduce costs, increase operational efficiencies, and fuel growth initiatives,” said Shelley Salomon, vice president of HAQM Business, in the 2025 State of Procurement Data Report, based on responses from 3,500 procurement leaders.

An industry at a crossroads

It’s a pivotal moment of convergence in the hospitality industry, with more guests to serve and greater demands created by those guests than ever before. Meanwhile, hotels are striving to meet this rapidly shifting environment with fewer resources, particularly labor.

Strong demand for group travel—small and large meetings—as well as business travel in recent years is helping hoteliers offset fluctuations from leisure, government and international travel, hotel chain and data analytics executives have repeatedly said. While forecasters have softened some of their more robust growth estimates due to weaker macroeconomic indicators, CBRE Hotels Research in May said it still expects “increased group and business travel” in 2025 from prior-year levels. At the start of 2025, Oxford Economics and STR data in The American Hotel & Lodging Association’s 2025 State of the Industry Report projected U.S. hotel occupancy to reach 63.38% in 2025, up slightly from 2024. ADR is expected rise to $162.16, exceeding the 2024 rate, while RevPAR is expected to rise to a record high of $102.78.

That’s the good news. The trickier part of the equation comes with the higher guest expectations associated with those rising rates. Research indicates that customers in some of the higher hotel tiers remain satisfied with the value received for their lodging dollar. In the mid and lower tiers, guest satisfaction fell significantly last year as rates increased. But in the latest findings, guest satisfaction appears to be rebounding.

Changing guest expectations, shifting demands

The average score in J.D. Power's 2024 North America Hotel Guest Satisfaction Index Study dropped to 647 on a 1,000-point scale, down from 655 in 2023. While year-over-year scores declined just two points in the luxury tier and actually increased by three points amid upper upscale hotels, satisfaction nosedived by 14 points among midscale properties, and by 20 in the economy segment. In a new wave of results announced in May, “guests are noticeably happier with limited-service hotels … while budget hotels have seen a modest uptick in guest approvals,” officials said.    

"We are seeing changes in hotel guests’ travel behavior," said Andrea Stokes, J.D. Power hospitality practice lead.  “Hotel guests say they are taking fewer trips, on average. Yet, those hotel guests are staying longer on their trips, and this puts a real focus on the hotel property for everything from room cleanliness and facilities maintenance to interactions with front desk personnel. Ultimately, traveler expectations have increased along with hotel room rates, and when hotels do not meet or exceed those expectations, the perception of value for money declines." North American hotel guests are staying an average of 3.43 days per trip, up from 3.36 in 2023. This changing dynamic of fewer, but longer stays is putting a greater focus on the details of the hotel experience.

Addressing this disparity between guest expectations and pricing becomes all the more challenging in a hotel industry often seeking to do more with fewer resources, namely labor. Although hotels are expected to add more than 14,000 direct employees in 2025, employment levels will still fall short of 2018 and 2019 levels, according to Oxford Economics and STR data. Further, a December 2024 survey by AHLA and Hireology revealed that 64.9% of respondents are still dealing with staffing challenges.

Procuring the solution

Faced with this crucial intersection of operational efficiency and guest satisfaction, moving to a revamped, centralized purchasing solution becomes a no-brainer. Smart procurement can help hospitality companies with centralized procurement processes that meet standards for quality, sustainability, small or local suppliers, and cost controls, while providing flexibility to meet changing customer expectations.

Should a property see more leisure or family customers, or greater international, group or business demand compared to historical patterns, for example, smart procurement enables managers to rapidly pivot to meet these new demands. Instead of ordering large case sizes for price efficiencies, hospitality organizations should order based on projected occupancy to reduce inventory waste and profit margins.

Hospitality companies can also improve purchasing controls and increase spend visibility to drive both cost and time savings. One way is to implement buying policies that route all purchases through a centralized payment option that eliminates the need to reimburse spend on personal or corporate credit or purchasing cards.   

By shifting to a digital invoicing solution, hospitality organizations can streamline purchasing for multiple locations. This can drive efficiency by reducing the volume of expense reports.

And, the less time team members and managers spend creating and approving expense reports, the more time they can direct toward guest-leaning activities that drive satisfaction. This is especially vital at mid and lower tier hotels, where staff members tend to wear multiple hats.

“Staff service is now the highest-scoring factor in this study across all hotel segments from economy to luxury,” Stokes first said of 2023 results, which indicated a direct correlation between staffing levels and guest satisfaction, “underscoring the critical role that frontline staff play in defining the guest experience.” The need to invest in staff, service and facilities was again echoed in the latest results.

More responsible purchasing

Another significant concern among both hotel guests and hotel procurement staff is the use of small and local suppliers and more sustainable products. More sustainable purchasing is very important or a top priority for 62% of decision-makers and 67% of senior leaders over the next one to two years, according to the HAQM Business 2025 State of Procurement Data report.

According to the study, 80% of decision-makers confirm that their organizations have mandates or goals for partnering with certified sellers. In the future, 35% of decision-makers and 37% of senior leaders want procurement to dedicate more time and resources toward setting responsible purchasing goals and sourcing from certain suppliers, making it a top priority for both groups.

“The impact of sustainable procurement is something all our customers are asking about,” said one technology procurement senior leader interviewed for the report. “It’s reshaping how we think about our supply chain, from sourcing to delivery.”

Originally published in Business Travel News