Theories and Practices in Tourism, Marketing and Management

Introduction

Today, hotel businesses are no longer simple structures that only meet the overnight stay needs of customers but have become complex businesses that respond to the needs of customers in many different areas such as food and beverage, entertainment, sports, meeting-congress, banqueting and spa-wellness. In this respect, hotels are businesses that must adapt to changing technology, market dynamics, travel motives and changing economic structure (Rutherford & O’Fallon, 2007).

Hotel businesses, which must adapt rapidly to the changing structure of the tourism industry, stand out as businesses that offer physical products that will appeal to the expectations of post-modern tourists and services to support them in the same place with their dynamic management structure. In this respect, hotels are both an industrial business and a service business. Hotels, which offer a wide range of products and services to their customers due to their different service units, need to cooperate with many suppliers and develop close relationships based on trust (Tektaş & Kavak, 2010; Solmaz, 2019). These relationships positively affect both the financial performance of hotels and their satisfaction as an industrial buyer (Kim & Cha, 2002; Solmaz, 2012; Solmaz, 2016). However, the distribution channel in hotel businesses is short, and there is a short time between the procurement and preparation of products and their presentation to the guest. In addition, the obligation of hotels to provide similar quality, consistent products, and services to their guests always makes suppliers more important for hotel businesses renders suppliers of greater importance to hotel businesses (Akbaba & Çavuşoğlu, 2017: 48–49).

Hotels are businesses that provide uninterrupted service on a 24/7 basis throughout the year. In such a situation, coordination and mutual information exchange between hotels and their suppliers becomes extremely critical (Solmaz, 2019). It is obvious that hotels, which purchase approximately 3000 to 10,000 different products and services with orders ranging from 50,000 to 100,000 (Uyar, 2015), need a highly efficient supply chain structure. At this point, SCM, which is an approach to manage all the goods, services, information, and financial flows in the distribution channels from suppliers to final consumers (Cooper & Ellram, 1993), emerges as a modern management technique that should be used for hotel businesses aiming to provide customer satisfaction at a high level.

In this study, the purchasing characteristics of hotel businesses, purchasing structures, supply chain structures developed for the hospitality industry and the roles of the actors in this structure have been tried to be discussed in general.

The Critical Role of Purchasing in Hotel Operations

The concept of purchasing generally means procuring the things we need in daily life. For hotel professionals, this definition is quite limited. For hotels, purchasing refers to the agreements made to procure the goods and services from suppliers in line with the profitability targets of the business (Quayle, 2006: 3). In these agreements, it is clear which characteristics each product group should have. In line with these characteristics, the procurement process carried out at the right place and time, at the right price, at the most favorable cost, in accordance with the quality expectations of the business can be defined as professional hotel purchasing (Monczka et al., 2009: 39).

Purchasing is a strategically important function in supply chain management in terms of its contribution to the effectiveness and efficiency of the business and its positive impact on profitability (Fredendall, 2001: 213). It should be stated that purchasing for a hotel is much more than receiving offers from suppliers and making decisions (Evans, 2007). While Porter (1980) emphasizes the importance of strategic purchasing in terms of cost leadership, Koçoğlu and Avcı (2014) state that purchasing will contribute positively to the capital turnover rate with the cost savings it will provide. Reducing inventory costs, creating value for consumers, and ensuring competitiveness are among the other critical effects of purchasing for businesses (Akturan, 2009).

Purchasing Structure and Process in Hotel Businesses

Purchasing the materials needed in the operational departments of a hotel (front office, housekeeping, food, and beverage) and all the products needed by the support departments depends primarily on effective teamwork and effective supply chain management. Despite this, the organization of purchasing departments in hotel businesses is quite simple and the products needed by the entire hotel are purchased with a small number of personnel (Uyar, 2015).

The organization in international chain hotels is slightly more complex than in independent hotels (Feinstein & Stefanelli, 2008). In an independent five-star hotel, purchasing activities are usually organized by a purchasing manager reporting to the general manager and a purchasing chief, purchasing specialists and storekeepers, whereas in chain hotels, due to centralized purchasing, there is a vice president of purchasing and a corporate purchasing director reporting to the head office (Warfel & Morrison, 2005).

As mentioned above, hotels, which are service-producing factories, purchase from a wide range of areas. The products purchased for a hotel can be listed as general categories as follows. These also draw a general framework of hotel suppliers. As seen in Table 1, hotels supply dozens of different goods and services in 10 different main categories.

It is not easy to produce a final product from all these different inputs and to ensure customer satisfaction. Therefore, it is imperative for hotels to establish effective communication with their suppliers. In fact, at this point, it should be noted that all this purchasing organization and supplier communication is now carried out online via the internet (Kothari, Hu, & Roehl, 2005). In addition, there are many automation programs for hotels and restaurants to make effective purchasing and inventory tracking. These automation programs are also adapted to the central automation programs used by the front office and can be configured according to the service and organizational structure and other characteristics of each hotel.

In the classical operation, the purchasing process for a hotel business commences with the demands of different departments within the hotel. These requests, which are transmitted to the purchasing department by department managers, are collated in the purchasing department and the order for the relevant products or services is dispatched to the supplier company. Thereafter, the order is monitored, received, stored, and transferred to the relevant departments. In this context, the critical stock amount for each product is determined by department managers and the purchasing team. Purchase requests are considered when this stock falls below this amount. In most cases, the automation programs used provide a direct warning when the critical stock falls below the critical stock.

In addition, in larger organizations (in cases of hotel-specific production), on platforms called B2B panels, the buyer and supplier can mutually track stock on a common network. There are also some upper limits on purchasing for many product groups. At the same time, each department of the hotel determines its own product specifications for the materials it needs. These specifications are the main criteria for the purchasing department during the supplier research and selection phase.

Supply Chain Concept and Structures

The supply chain concept emerged at a time when businesses began to focus on their core competencies and realized that collaborating with other firms provided them with many advantages. The resource-based view (Wernerfelt, 1984; Rumelt, 1984; Srivastava, 2005), which argues that competitive advantage is possible only if the firm has unique knowledge, skills, resources and competencies that are difficult to imitate, has led to the development of the understanding of working with the most competent companies in its own business field by focusing on its own competencies and outsourcing in areas other than this. It can be stated that the concept of supply chain management emerged because of this change in philosophy.

In the current highly competitive business environment, companies are striving to reduce costs, enhance profitability, and ensure coordination and control in their operational processes. To ensure the smooth flow of products and services from the initial supplier to the final consumer, it is crucial to cultivate close and effective relationships with the businesses involved in the supply chain. Indeed, these factors have contributed to the proliferation of supply chains (Mentzer et al., 2001; Kaya & Azaltun, 2012).

The concept of the supply chain was first formally introduced in the field of logistics literature (Cooper and Ellram, 1993; Lumnus and Vokurka, 1999). It can be defined as a network that facilitates the flow of products and services to the consumer in a way that creates value, encompassing all businesses involved in the process from the initial supplier to the final distributor (Christopher, 1992). This network encompasses a diverse range of entities, including raw material suppliers, enterprises engaged in the transformation of raw materials and semi-finished products into processed products, producer/manufacturer enterprises, and distributors, wholesalers, and retailers responsible for the distribution of final products to the end consumer (Paksoy, 2005; Sarıoğlan, 2011).

In essence, a supply chain is defined as a network of two or more legally distinct entities that are connected through material, informational, and financial flows. These entities may include firms engaged in the production of parts, components, and finished products, as well as logistics service providers. Additionally, the final customer may also be considered a part of the supply chain (Stadtler, 2005).

The configuration of supply chains varies according to the size of the chain and the number of links connected to it, the scale of the enterprise, the field of activity, and the goods and services it produces. However, in the literature, supply chains are generally analysed in two ways: as “single-stage supply chains” and “multi-stage supply chains” (Solmaz, 2016).

1. a) Single-Stage Supply Chains
2. A single-stage supply chain is a method used by companies that are usually disconnected from the production stage. In this method, the raw materials and materials received become products after going through a manufacturing or transformation process. This type of supply chain does not have many information processing and decision-making functions. Single-stage supply chains are also the focal point of supply chains. It is a supply chain used in small businesses as it is not overly complex (Metz, 1998).
3. b) Multi-Stage Supply Chains
4. A multi-stage supply chain typically comprises a multitude of processes. It is a common occurrence in businesses where outsourcing is prevalent, particularly in those where the supply chain is of significant complexity. Indeed, multi-stage supply chains are a combination of single-stage supply chains. The multi-stage supply chain model is analogous to the model proposed by Mentzer et al. (2001) in the final supply chain structure. This model encompasses a significantly larger number of entities than the basic supply chain, including suppliers’ suppliers and third-party service providers, among others.

Supply Chain Structures in Hospitality Industry

The purchasing structures of different hotels may appear similar, but in fact they are quite distinct. The size and service features of the hotel are key determinants of the purchasing structure. For instance, the service concept of a city hotel and a coastal hotel is not the same. Consequently, the type and quantity of goods and services demanded by these two types of hotels also vary. This results in the supply chain structure being established in a different manner. The size of the hotel is the most important variable that determines the supply chain structure. The size of the hotel affects its bargaining power with suppliers. When suppliers in the hospitality industry are evaluated, it is evident that the size of the business is a crucial criterion for them to accept the hotel into their customer portfolio.

As illustrated in Table 1, hotels must procure goods and services from 10 distinct product groups to maintain their operations. This is a mandatory requirement for the continued functioning of the hotel. However, when the sub-suppliers in each main supplier group are considered, a hotel must enter into numerous agreements with a multitude of suppliers for a vast array of products and must also oversee the fulfilment of orders. Despite the potential for online ordering, inventory tracking and purchasing processes to be conducted with the aid of automation programs, the reality is that the process is often fraught with difficulties. This has given rise to a new category of suppliers in the tourism industry, which we will refer to as “Hotel Supermarkets” in this article.

A hotel supply chain is comprised of three actors: suppliers, hotels, and customers. While this chain is relatively straightforward, it is not a common occurrence in real life. The primary reason for this is that the tourism industry does not have a direct distribution system. The nature of the touristic product necessitates that the final consumer, the tourist, be transported to the location where the product and service are available. This service is provided by tour operators and travel agencies, which are significant actors in the tourism distribution channel (Kozak, 2016).

Figure 4, which models the basic supply chain structure for hotels, represents a more realistic approach. In this model, which is mostly used by small hotels, the hotel makes direct agreements with all suppliers. This method is useful for small businesses as the quantities of products to be supplied are relatively small. On the other hand, hotels below a certain scale cannot establish a relationship with hotel supermarkets anyway.