The Role of eProcurement in Sustainable Practices for the Hotel and Casino Industry

Over the last decade, the hospitality industry has embraced the concept of sustainable procurement. Within many hotels and Casinos, the primary purchasing criteria are no longer a product’s price and quality but also supporting various sustainability objectives, such as reducing environmental impacts and enhancing community economic development. With this shift, the procurement function has evolved beyond its strictly transactional focus on purchasing to become a strategic business partner able to drive efficiencies, cost savings, and sustainability for the organization.

Of course, the complicated, anticipatory nature of this industry segment calls for a data-driven, birds-eye view of a property’s operation that can only be achieved by applying eProcurement technology to existing hospitality procurement processes. This technology is designed to centralize and automate interactions between an organization, guests, and other value chain partners to improve the speed and efficiency of procurement practices.

eProcurement software replaces paper-based operations by automating traditional procurement processes, helps analyze spend for strategic cost-savings, and improves the speed and efficiency of procurement practices. But eProcurement’s role in sustainability goes far beyond saving paper!

The Rise of eProcurement

In 2021, eProcurement emerged as one of the fastest-growing digital commerce sales channels, and by the end of this year, e-procurement is expected to top $1 trillion in annual sales for the first time. Over 2022, the industry has seen a 17% growth rate, with e-procurement now accounting for 8.5% of all electronic sales and 7.1% of all B2B sales.

Within hotels and casinos, specifically, procurement companies work to simplify and streamline otherwise complicated procurement processes that traditionally lack automation and integration. By moving away from manual processes, hospitality brands unlock a centralized, holistic view of their data, which informs enhanced accuracy in purchasing and budgeting. “A significant benefit of e-procurement is to disseminate information – essentially instructing buyers on what to purchase – and to collect spend information from all properties to analyze it centrally,” said Hilton Hotels International in 2011. “The system offers valuable analytical tools, providing an integrated data warehouse that provides summarized or detailed reports of the organization's purchasing data.”

With a suite of comprehensive e-procurement tools, including purchasing requisitions, RFQs, supplier catalogs, transaction tracking, budget analysis, advanced workflow approvals, and more, hospitality brands can leverage the speed and ease of digital tools to increase visibility and optimize spend. More importantly, when hospitality brands mitigate rogue spend and workflow inefficiencies, they can better offset some of the financial challenges ushered in by the COVID-19 pandemic over the last two years. In fact, our findings show that hospitality brands leveraging a new-age e-procurement platform benefit from significant cost savings and productivity enhancements. These benefits include an 80+% compliance rate, 7-10% overall savings from compliance improvements, 10-20% productivity gain, and the reduction of approval time from 3-7 days to minutes.

As we shift into 2023, we will also see hospitality brands using e-procurement tech to reduce rogue spend, shorten procurement cycles, improve inventory management and contingency planning (especially in the wake of the pandemic), empower touchless procurement, and explore the power of blockchain technology in protecting sensitive data and enhancing supply chain transparency.

The Sustainable Trickle-Down Effect of eProcurement

Perhaps one of the most significant trends in hospitality procurement is the focus on sustainability. Currently one of the top trends in hospitality, the industry is feeling mounting pressure from customers to adopt eco-friendly policies and practices. Hotels and casinos, especially, must cater to the growing guest demand for sustainable options. The sustainable tourism market is projected to develop at a compound annual growth rate (CAGR) of 23.4% between 2022 and 2032. Moreover, the segment is expected to grow by one-third by the end of this year, topping $1 trillion in value; in 2032, it is expected to reach $8.4 trillion. Not only that, but Booking.com research recently revealed that 81% of travelers cite sustainable travel as being important to them, with over a third (35%) of global travelers saying that the sustainability efforts of accommodations and transport providers play a strong role in their property and transport decisions respectively.

With this in mind, hospitality brands must consider their operation's impact on the climate and, more importantly, how they can adjust or replace legacy processes to make them more environmentally conscious. Of course, sustainable practices within hotels and casinos are multifaceted, but it’s important to note that two-thirds of the average company’s environment, social, and governance footprint lies with suppliers. Much like large corporations are expected to offset their significant climate footprint by taking the lead on environmental causes, hospitality brands are responsible for choosing brands during procurement that have a track record of sustainable responsibility (environmental, social, and corporate governance credentials).

Now, more than ever before, hotels and casinos must adopt a ‘top-down’ approach to sustainability by keeping ESG considerations at the core of their procurement strategy, using sustainability measures as a critical differentiator in sourcing suppliers. While this may have been difficult – if not impossible – to achieve with manual procurement efforts, the implementation of eProcurement technology finally empowers hospitality brands to achieve supply chain sustainability at scale.

There is simply no denying it, hospitality brands of any size and scale stand to benefit from digitizing their procurement efforts to unlock a truly intuitive, efficient, and future-proof bird's eye view of their organization. It’s time to procure and conquer – more specifically, it’s time to e-procure and conquer. Fortunately, we can help.

Click here to learn more about BirchStreet’s transformative e-procurement solutions for the hospitality industry.

About BirchStreet Systems

Founded in 2002, BirchStreet is the leading global provider of enterprise procure-to-pay solutions for the hospitality sector. BirchStreet's software platform provides leading global hospitality brands with a full suite of procurement applications, including eProcurement software, accounts payable automation, invoice management, inventory management, recipe management, supplier payments, and reporting and analytics. BirchStreet's customers leverage the company's solutions to access a broad network of suppliers and manage billions of dollars of spend annually across a wide variety of categories, including food and beverage, operating supplies, maintenance services and capital projects. For more information, please visit www.birchstreetsystems.com.

Gareth Fraser
Vice President of Sales & Marketing Enablement
BirchStreet Systems