Challenge: Managing Multiple Operations
Blackstone Hospitality Group was formed in 2012 to answer the growing needs of ownership groups, investors, and REITs. With five hotels and three more coming soon, Blackstone has quickly expanded in the California and Washington markets.
Braxton Myers, Vice President of Operations at Blackstone, oversees operations and serves as the interim general manager for one of the properties. The majority of his time is spent overseeing revenue generation and cost controls.
Solution: Time to Focus on What Matters
Avendra is currently working in all of Blackstone’s properties, helping to cut costs and manage supply chain operations in its administrative, engineering, F&B and rooms programs.
One of the greatest values of the Avendra solution, according to Myers, is right after the acquisition phase when Blackstone is looking to quickly improve profitability and streamline operations. In fact, six months after an acquisition, Blackstone will compare the financials from when they acquired the property. More often than not they always find they are doing much better. Myers attributes this trend to previous owners who are often “stepping over dollars to get to pennies.”
“If you are a GM trying to run a select service property, and you spend six hours a day running to Costco or Sam’s Club, the opportunity cost of not being in your hotel—running your property in a profitable manner, trying to increase revenue, reducing controllable costs—are way higher than what you would ever save,” said Myers. “These are times when you can be prospecting, working on client development, engaging with your employees and working on things that can have an impact.”
According to Myers, a typical independent hotel is managed by a family who has tried to cut costs whenever possible. As a result, they may be using 15 to 20 vendors and it’s a logistical nightmare. “It’s just not realistic to keep that kind of pace. Managing multiple vendors takes a lot of time,” said Myers
Benefits: Supply Chain Consolidation and Improved Profit Margins
Myers has found Avendra’s purchasing power is so much more than what he can negotiate on his own. “One of our properties incurred 17 percent savings in food costs with Avendra in 2014, on a spend of about $380K,” commented Myers. “If you spread that over five properties, it’s a $140 – $150K savings in just one year, from just one vendor.”
“There is not a lot of profit margin in this business. So with Avendra’s price breaks on 85 percent of what I purchase on a yearly basis, the impact is great.” said Myers. “With Avendra, you have one vendor, you know it’s the best price and you don’t have to shop around for anything else.”