ROCKVILLE, MD -- Many businesses were caught off guard by the explosion of the Internet and the rapid technological advances made during the last five years. This is especially true when it comes to e-procurement, which took the hospitality industry by storm and continues to push its way into the heart of the business.
Dennis Baker, President and CEO of Avendra LLC, a leading professional procurement company, gave Hotel Interactive some insight as to where e-procurement stands in the industry, focusing on yesterday, today and tomorrow.
“No one expected the demand for online servicing to happen that fast. Hotels weren’t ready from a technological standpoint, employees weren’t trained and the supply was highly fragmented,” said Baker. “But e-procurement is the right answer and nothing has degraded the opinion that it has tremendous benefits.”
Marriott International, Hyatt Hotels, ClubCorp USA, Bass Hotels and Resorts and Fairmont Hotels and Resorts partnered to establish Avendra, which is currently an independent company, in January 2001. Each company contributed its procurement groups, employees, and processes, as well as its annual expenditures in managed locations to Avendra. As a result, Avendra’s market is estimated at $80 billion in size, making it the largest professional procurement organization in the hospitality industry.
And while the rest of the economy is struggling, Avendra seems to be reaping the benefits of the industry’s new spotlight on cutting costs.
“Avendra hasn’t felt the effects of the economy because we’re still in the very early stages, and everything just continues to move forward,” said Baker, “but often times in an economic decline, businesses focus on maximizing revenue and Avendra views this as an opportunity because we offer better value.”
In addition, Baker also attributes the success of the company to hiring the right kind of people. “Hire really great people,” Baker said. “I know it sounds like a truism, but this industry is a high-relationship business and it’s people who run that business.”
Baker, a native of Baltimore and a graduate of Georgetown University, began his career with Marriott in 1987, holding various financial positions. When Marriott established a business unit to consolidate all of its procurement efforts under the name -- The Marketplace -- Baker was named Executive Vice President and General Manager.
“It was a migration,” said Baker. “Marriott began looking at procurement as a service to be offered, and that led to a procurement project that turned into The Marketplace, which turned into Avendra.”
Avendra’s portfolio of programs includes food and beverage, engineering supplies and amenities and administrative services. In July, Avendra executed a five-year contract with GoCo-op, a provider of Web-based purchasing systems for the hospitality industry, under which GoCo-op will develop, host and manage the content of a private e-procurement portal used by Avendra’s customers and suppliers.
“[Avendra] looked at a lot of different players before landing on GoCo-op, but the key elements were that the company had great technology, and was aligned with our strategy of working with the hotel industry as a service provider,” said Baker.
Currently, Avendra is concentrating on growing the business, and has a customer portfolio of 1,000 individual properties, plus the accounts from the five founders. The company is concentrating on working on the business process and hiring people, according to Baker.
“Avendra is the ultimate accomplishment of an early vision that turned out to be a lot more complex and difficult than anyone had imagined,” said Baker. “People didn’t know if it made sense to bring together a number of competitors, but now time has passed, and we’re extremely pleased that the strategy remains to have a staying power.”
