Hotel Logistics: Timing Things

If refitting rooms in a luxury hotel is one aspect of Kuehne+Nagel’s strategic services, supplying in-room products like cosmetics, toiletries, laundry bags and shower caps is its another facet. Providing such a varied range of hotel amenities is KN’s unique selling point and the German logistics major has come a long way since branching off its business nine years ago.

Hotels find it daunting to be never-out-of-stock perennially or to maintain replenishment lead time – the sum total of the order, production and delivery time. They would simply love to save on quality time, room and cost by outsourcing tasks like tracking freight movement, piling up stock in premium space, opening new branches  and refurbishing projects. KN has been cashing in on this need since 2000 by providing integrated, single-source supply chain for hotel amenities in 15 countries.

For any hotel operator, cost-optimal distribution of luxury amenities is of absolute importance, says Achim Glass, corporate vice-president of KN’s hotel logistics. “Hotels can spend months selecting the right manufacturer or amenity supplier and fighting over costs, while enormous potential for cost savings lies buried in the way they handle logistics,” he explains.
With hotel chains looking for growth in leading tourist destinations like the Middle East, China and India, opportunities in specialised hotel services are opening up for logistics companies. As the hospitality sector in India is poised for rapid growth in the next five years – with plans to add more than 1.5 million hotel rooms by 2012 – its imminent requirements could be freight management, warehousing and distribution services.

Logistics companies are starting to respond to these procurement needs by diversifying their portfolios as e-commerce solution providers. Their new assignment involves a logistical survey of the hotel site, setting up receiving gateways and following up with suppliers, customs clearance, transit to warehouse, deconsolidation at warehouse and inventory management, delivery to hotel receiving ramp, and delivery to room, with unpacking, installation and recycling services.

Schenker Solutions: The Right Timing

 

DB Schenker, one of the new entrants in this segment, sees the potential growing in India. “India is expected to see maximum change in proportion of room supply in BRIC countries over the next three years,” it foresees. This implies ample scope to explore amenities logistics.

The business model, as it simplifies the complex, makes sense to all the parties involved. If cost optimisation is the moon that it promises, logistics companies wouldn’t mind going the extra mile to fetch and fix luxury shipments. And hotels? They can be hassle-free.

The transportation and logistics division of Deutsche Bahn that has been offering international air and ocean freight solutions besides logistics and global supply chain solutions, now forays into hotel logistics.

Having offered proven global expertise for numerous key industries, DB Schenker intends to leverage its expertise and meticulous planning for hotels to provide solutions ranging from order follow-up from suppliers to installation of products.

The foray

In the current recessionary scenario, where real estate industry is one of the first to go down and one of the last to recover; the top global brands in the hotels industry continue to maintain their position. World’s top-20 chain hotel brands together saw their global room supply increase by 4 per cent at the beginning of the year. 

Most of the global hotel chain brands have extensive international development plan in new markets like India, China, Middle East and Americas. Amongst nominal decrease in few brands, brands like Crown Plaza and Express saw a growth of 12.3 per cent and 11 per cent respectively.

The hotel industry is looking at the time as opportunity to re-launch the mid-sized brands since recession causing many travelers to trade down from upscale brands. Despite some lack of liquidity in the market, the industry is looking at long-term growth. As a certain number of national economies have been affected by the global crisis, more and more hotel chains have shifted the focus on more promising markets like Brazil, India and China.

India’s prospects for hotel logistics are high because it is one of the fastest growing economies of the world and one of the potential markets for almost every international hotel chain. Companies like Best Western International, Accor Group and others are expanding in India and this has been increasing the potential for associated services, including logistics.

Potential in India

India ranks 18th in business travel and will be among the top-5 in this decade. Sources estimate that demand could exceed supply by at least 100 per cent over the next two years. India Hotel Industry is adding about 60,000 quality rooms, currently in different stages of planning and development and should be ready by 2012. 

MNC Hotel Industry giants are flocking to India and forging joint ventures to earn their share of pie in the race. The government has approved 300 hotel projects of which nearly half are in the luxury range. Room stock supply is expected to triple in Chennai and Kolkata and double in Delhi, Hyderabad and Bangalore.

Hoteliers’ response

Logistics of hotel items are challenging and complex. This can be divided into logistics of consumer goods to a break-bulk shipment which requires expertise across the verticals and functions.

This gives rise to the need of an efficient supply chain to manage the entire flow of amenities; for an optimum utilisation of resources and on-time requirements. We fulfill these needs by providing global sourcing from suppliers, freight solutions, customs clearance, warehousing and distribution to customer based on a ‘Never out of stock’ (NOOS) operation at customer’s place. Our e-commerce application enables the hotel customers to book its order on-line to maintain their applicable requirement at the moment.

As hotel logistics is in nascent stage in India, hoteliers may take some time to understand the benefits to outsource the entire spectrum of supply chain management, yet in long run it will be one of the biggest fields for our logistician to work with because of complicacies involved in supply chain, freight forwarding, global supplier’s base etc. The field requires the expertise in all the areas from projects logistics to the supply chain management of FMCG goods.

Growth factors

• The gap between demand and supply of hotel rooms has led to the development of hotel industry, including adding a sizeable number of branded hotel rooms in the next two to three years.
• The existing growth potential for budgeted hotel remains the growth driver for the next five years.
• Foray of global hospitality companies to expand business volume with upcoming Commonwealth Games in New Delhi.
• Corporate growth in a booming Indian economy has led to greater business travel.
• Indian tourism industry is expected to grow by 7 per cent every year in the next 10 years, adding to the demand of hotel rooms.