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LAS VEGAS — Hotel franchisees announced Friday that they will launch their own cooperative purchasing program. Members of the Asian American Hotel Owners Association will be able to purchase furniture, fixtures, food, beverages, equipment and supplies more economically and efficiently through an innovative new Internet-based purchasing cooperative.The announcement was made this week during the 2011 AAHOA Annual Convention & Trade Show at The Venetian and The Palazzo in Las Vegas, which was attended by nearly 4,000 hotel owners, vendors, and hospitality industry leaders.
Hotel franchisors often receive undisclosed rebates from vendors. In turn, they require franchisees to purchase supplies from these vendors with built-in mark-up fees. Franchisees often criticize these undisclosed markups as a type of hidden royalty fee.
Now franchisees are taking purchasing into their own hands. "Due to the complex nature of purchasing transactions that involve literally billions of dollars each year, details of the cooperative purchasing program required considerable careful planning throughout the past year, but we are now in the final stages of making this valuable benefit a reality for our members," said ChandraKant "C.K." Patel, AAHOA's outgoing chairman, who was instrumental in developing this initiative and made it one of the priorities for his term that began last June and concludes at the association's 2011 Annual Convention.
The e-Procurement system that is set up by hotel franchisees looks well positioned to become one of the industry's top buying sources. California-based BirchStreet Systems, a well-known provider of procurement, financial control, and online procurement processes to thousands of hotels and restaurants, will manage the new site. The firm has ties with more than 160,000 suppliers.
Franchisors are taking notice.
A place where members and vendors come together, the AAHOA eMarket website will provide AAHOA members, who make up nearly 40 percent of America's hotel owners, with negotiated prices. Vendors can benefit from significantly increased sales.
"Perhaps the best benefit in today's fast-paced work place is that the store is always open — orders can be placed any time of day, and 365 days a year," said Fred Schwartz, AAHOA president. "We are bringing together the power of the Internet with the buying power of our members to create a vehicle that offers a way to effectively manage and significantly reduce operating costs," he added. "There is influence in numbers, so our e-Procurement system is sure to quickly become one of the hospitality industry's leading buying sources." AAHOA expects its eMarket to be operational by the end of the year.