ROCKVILLE, MD—The hospitality procurement industry is continually affected by a variety of factors such as economic conditions and changing technology. For a company to have true staying power, it must grow and adapt to such changes in order to thrive. Avendra is a company that has done just that, and as it celebrates a decade of growth, it is already looking to the future.
Officially founded in 2001, the idea for the company began to form in 2000 among the major players in the hospitality industry. “We were trying to figure out how to get a bunch of competitors to work together to manage the supply chain in the hospitality industry more effectively,” said Dennis M. Baker, president and CEO of Avendra. However, prior to taking his current post, Baker served as executive vp and general manager of The Marketplace by Marriott, which was a division of Marriott International that was responsible for developing and implementing a new strategy for consolidating and streamlining procurement.
Founding companies Marriott International, InterContinental Hotels Group, Hyatt Hotels Corp., Fairmont Hotels & Resorts and ClubCorp joined forces to formulate a solution that would redefine supply chain management through a more streamlined procurement process. “The hospitality supply chain was very fragmented from both the supplier and customer standpoints. There were a lot of inefficiencies and there was a lot of variability from a pricing perspective,” Baker explained. “There was clearly an opportunity for a synergistic intermediary that would benefit both sides.”
Avendra has grown to work with more than 4,500 customers and 900 suppliers and is the largest professional purchasing company serving the hospitality industry in North America. But Baker noted the original idea was met with some skepticism in the industry. “There was a lot of concern on the supplier side because there were a lot of similar ventures being attempted at the time. Also, on the technology side, there was so much buzz around the Internet but it faded because of complications that developed…not everyone had access to computers and suppliers were not yet equipped to do business that way,” he said.
Relying on technology as a tool but not a critical element of its business, in its formation stage Avendra focused on helping suppliers understand its benefits. “By bringing in other major players we communicated to suppliers that we could help them gain greater access to hotel customers,” Baker said. “Our biggest challenge on the customer side was convincing them to embrace a new concept of [hotel]brands that do battle with each other now being part of the same company.”
Having spent the last decade offering contracting, quality assurance, product specification, operations and customer service expertise as well as reporting and analytical tools, Avendra’s core values have remained consistent. “When Avendra started, we wanted to be the company of choice for suppliers that needed access to the lodging markets,” Baker said.
One such company continuing to benefit from Avendra’s expertise is one of its founders, Marriott International. Tim Sheldon, global officer, global operations services for Marriott International, commented on how Avendra has assisted Marriott as it expanded its brands and portfolio. “Marriott has tried to capitalize on the contracting expertise and purchasing power that Avendra has. They have been able to establish contracts for new products and to adapt to the changing environment and our customers’ demands,” he said, adding Marriott has found its relationship with Avendra to be particularly valuable during downturns in the economy.
“During the recession, we turned to Avendra to help us identify new and innovative products that would be aligned with our brand standards, but also help save money during the difficult economy.”
Another founder, Hyatt Hotels Corp., also continues to rely on Avendra’s services to secure the best pricing and instill confidence in its suppliers. “Having confidence in suppliers gives owners a level of comfort. Avendra’s quality assurance department goes out to visit manufacturing facilities to make sure they’re doing what they should,” said Anne Hanch, vp of purchasing for Hyatt.
Hanch added Avendra’s in-depth research and forecasting have also helped to predict pricing trends that will impact Hyatt’s properties. “Avendra is constantly looking at pricing and sharing that information with us. That is very important to our owners,” she said.
On the supply side, companies which work with Avendra can access new clients and seize new opportunities to expand. “Marietta works closeley with Avendra on not only opportunities with the company’s founding partners, but on other opportunities outside of them. We work with the Avendra team to provide their customers with added value to all that we supply,” said Michael Stokoe, vp, national accounts for Cortland, NY-based Marietta Corp.
While it is celebrating the 10-year milestone by reflecting on the last decade, Baker stressed Avendra is looking forward and constantly working to enhance its capabilities to better serve its customers as the market changes. “Our goal for our new and existing customers is to align our procurement strategy to their current business objectives. That is different for every customer and needs to be tailored to what each one needs and wants,” he said. “People like to put our company into different ‘boxes’ to define us, but above all, we are a service organization and we are continuing our relentless pursuit to grow our business and broaden our services to add value for our clients and suppliers.”