Whether running a 10-bedroom guesthouse or a 1,000-room resort, hotel managers will inevitably face the challenge of procuring goods. Keen to maintain a healthy bottom line, purchasing needs to offer excellent value for the money, and a strong procurement strategy can help achieve this. To really get the most out of the procurement process, hoteliers also need to be confident in their negotiation skills.
While suppliers often have room to maneuver on their published catalog prices, it can take a skilled and patient negotiator to realize the savings available and a solid negotiation strategy to secure the lowest price. Here are tips for better negotiations with suppliers:
Be brave. Sometimes in business, it pays to be assertive. When it comes to entering into negotiations for supply contracts or purchasing decisions, confidence can be a hotelier’s secret weapon to achieving the biggest and best savings. Assertiveness can provide the upper hand in the negotiation process, but make sure to stop short of aggression, because that’s unlikely to win any favors.
Go into negotiations with a clear aim of what the ideal outcome will look like. Be firm, and challenge everything, because nothing here is set in stone. Suppliers want the business and need it to survive, so hoteliers should use their position of power to get the deal they want when it’s time to buy.
Ask open-ended questions. Avoid posing a question to which a supplier can answer “yes” or “no.” Hoteliers should focus on open-ended questions to tease out in-depth answers and put them in a good position to start negotiations. Closed questions run the risk of eliciting a flat “no,” which doesn’t leave much room for maneuvering.
Harnessing the power of open questioning is easy. Rather than starting a question with “can you” or “would we,” think about asking “what is,” “how many” and “when will.” Open questions not only reveal more about what the supplier is thinking, they also help build rapport and connect on personal levels.
Shoot for the top. In negotiations, it makes sense to aim for the top. Go for the biggest, bravest discount possible, and don’t worry about appearing rude by going in low. Suppliers negotiate daily, so they’re used to customers taking a hard line with their pricing.
Before negotiating, hoteliers need to do their homework. Calculate what an acceptable price will be, and be prepared to walk away from negotiations if the price is not right. Hoteliers should never compromise beyond what they were originally prepared to pay because there are always more suppliers to talk to.
Aim for a win-win scenario. Above all, try to walk away from the deal with both parties feeling satisfied. Shaking hands on a price that suits both parties adequately is key to developing a long-term relationship with a supplier, and securing great value rates on all future purchasing needs, too.
If the supplier feels they’ve been beaten into submission, they won’t be keen to do further business with that hotel. Similarly, if the hotelier has exaggerated the quantities or timescales for making future purchases, it doesn’t bode well for a healthy, symbiotic relationship for the future of both businesses.
Just as hotels are in business to make money, so hotel suppliers are in business to make money, too. Both parties need each other to survive, and both need excellent understanding and communication to grow their businesses.
Work on strengthening the relationship between hotel and supplier by asking for their input into purchase decisions and plans. Suppliers want hoteliers to succeed, because the hotel’s success is the supplier’s success, too, so don’t be afraid to ask for advice and support from time to time.
Contributed by hotel asset management company Michels & Taylor, Elstree, United Kingdom