A crucial task during the pre-opening phase is to specify and quantify the requirement for Small Operating Equipment (SOE), which includes items for guest rooms, housekeeping, F&B, front-of-house, banquet, kitchen, and hotel administration. In the absence of a SOE consultant, the hotel operator, in coordination with the general manager, must develop a checklist, arrange quotes from suppliers and secure approvals from the hotel owner. Poor management of SOE inventory will delay the procurement process. The absence of necessary items will hinder the hotel’s ability to operate, and could delay the hotel’s scheduled opening date.
In TFG Asset Management’s Pre-opening Strategies whitepaper, we outline the six stages of the pre-opening procurement process and the challenges that typically arise during this time:
Stage 1: Assist the hotel operator in establishing requirements in accordance to the brand standards, hotel demand and local requirements. It is usually the responsibility of the owner’s assigned procurement team of specialists to specify the necessary quantities and specifications for all items.
Stage 2: Ensure the procurement team is in charge of negotiating prices for all items.
Stage 3: Liaise with the hotel operator on a regular basis to reach a compromise on all items. The main issue here is that decision-making can be a lengthy process and agreements on every small detail must be made in order to proceed to the next stage. Disagreements with the hotel operator will put a halt to proceedings and impact the procurement process.
Stage 4: Accommodate the budget, bearing in mind that the owner’s main objective is to keep costs down. Stage 4 will be another long-lasting process requiring detailed justification, technical and commercial recommendations on each product to convince the owner.
Stage 5: Focus on the process of monitoring the manufacture of equipment. The consultant must manage the delivery schedule and coordinate with suppliers. If deliveries arrive at once, a warehouse will be required to store items, which will lead to additional handling costs. Late deliveries will add further pressure as missing essential items will delay the hotel’s opening date. The procurement process can be put on hold if the delivery schedule is not managed properly. It is recommended that 70% of SOE should arrive one month after the hotel’s handover to the operator.
Stage 6: The final stage is the arrangement of items. This requires staff co-operation. An experienced consultant must acknowledge that dissembling and arranging newly arrived items is not the staff’s priority. Lack of motivation and organisation will create conflict and possibly delay the process.
With different challenges arising each stage, we strongly recommended recruiting a SOE consultant. The consultant can prepare and review preliminary SOE listings and budgets hand-in-hand with the hotel operator and owner. The earlier an SOE consultant comes on board, the less risk there will be of delays.
For more in-depth analysis, click here to download TFG Asset Management’s Pre-opening Strategies whitepaper.
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