Latest / The Modern Hotelier / #321: How Streamlining Procurement Can Help Hotels Thrive | with Jesse Messitte
Transcript
- The Modern Hotelier #321: How Streamlining Procurement Can Help Hotels Thrive | with Jesse Messitte === David Millili: Welcome to The Modern Hotelier, the most engaged podcast in hospitality. Don't forget to follow, like, subscribe and let us know in the comments what you think about today's episode. Steve, who do we have on the program today? Steve Carran: Yeah, David. Excited for this one. It's gonna be a good conversation. We have on Jesse Messitte, the vice president of strategy and business operations at Avendra International. Thanks for joining us, Jesse. How we doing today? Jesse Messitte: Great. Thanks for having me. David Millili: All right. So Jesse, we're gonna dive in. We're gonna go through a lightning round. We're gonna get to know you better, your background, your career, and then jump into some thought leadership topics. Sound good? Jesse Messitte: Great. David Millili: All right. So when you were young, what did you want to be when you grew up? Jesse Messitte: You know, it ranged from fireman to lawyer to loving data, working with data. I grew up in the age of the PC and really just delved into a lot of statistics and type stuff, and that's where my career's kind of taken me and driven what I've done for the last 30 years. David Millili: All right, cool. So what's something that you wish you were better at? Jesse Messitte: Was better at? Really looking at ways of keeping the thoughts and processes organized and be able to scale things really well. Like, it's really important when you work with data to be able to scale information and just making sure that we can do that in an efficient way. David Millili: All right, so what's a luxury you can't live without? Jesse Messitte: Luxury I can't live without? My Peloton. David Millili: Okay. All right. Name a person dead or alive that you would like to take to lunch. Jesse Messitte: Probably Albert Einstein. I mean, he just provided so much to society and the world and just a really interesting person. David Millili: That's a good answer. If you could have a superpower, what superpower would you like to have? Jesse Messitte: I think I'd like to be able to fly. Always felt like that would be a cool thing to do. David Millili: Yeah, definitely. So tell us something that's on your bucket list. Jesse Messitte: You know, I'd like to hit all the national parks. I've traveled with my family extensively, but haven't hit them all. I've hit about half. But that would be a fun thing to do later in life. David Millili: Absolutely. Steve Carran: Very impressive, Jesse. So now we're gonna dive into your personal background, a little bit about you and what makes you tick. So you grew up in Bethesda, Maryland, an area I know very well for working there for a few years. How did growing up in Bethesda shape you into who you are today? Jesse Messitte: You know, it's interesting question. You know, a lot of my friends growing up, families worked for the government, right, outside of Washington, DC, and really kinda had a very similar backgrounds to myself and really built a close-knit group of friends growing up. People think of Washington as a very transient place, but the people that were career government employees were pretty stable and didn't move that much around where I lived, and just really built a good base of friends and got to see a lot of how business works and how politics work, and just really an interesting place to grow up. Steve Carran: Yeah, pretty easy to get to DC. Just take the Red Line on the Metro and you're there in 15 minutes. Jesse Messitte: You know it. David Millili: All right. So what inspired you to attend Grinnell College and pursue a degree in economics? Jesse Messitte: That's a great question. You know, I had never been to the Midwest before. I spent all my time kinda in the Mid-Atlantic East Coast. And I went out and visited the school and just really liked it. You know, one of the interesting things is while I was a prospective student, there's a freight train that runs through the middle of campus, and I jumped in at, like, 2:00 in the morning and rode it for about 150 yards, and I thought that was the coolest thing I'd ever done. So I was like, "I'm going to this school." And, you know, I think the benefits of a liberal arts education and just really learning how to write and critically think was something that really helped me in my career, has really helped me. Steve Carran: That's great. So in high school, you were a cross country runner at Charles W. Woodward High School. And for the state championship, you finished the cross country meet in 20 minutes and 36 seconds. Are you still a runner today? Jesse Messitte: So that was a very poor performance by me. Thank you for bringing that up. I don't run anymore. I do, I'm active and do a lot of biking. I've kind of transitioned from running to biking, but I do enjoy watching cross country and track and some of my friends have kids that are at, in the local high school system here where I grew up and I go watch meets occasionally and see, stay connected to that community. Steve Carran: Very cool. That might not have been your best performance there, but I did hear that you won a poker tournament in February at the MGM National Harbor in Oxford Hill, Maryland. It was a 400 pot limit Big O High-Low tournament. Quite a poker player, huh? Jesse Messitte: You know, I don't usually play poker tournaments, very rarely. In fact, that was the first one I ever played. I do play a fair amount of poker, but not usually tournaments. But I was encouraged by a friend of mine to enter that, and I did and— Steve Carran: Your first tournament and you won. Very— Jesse Messitte: To know. I'm not saying I'm going to go back. Steve Carran: There you go. Very impressive. So now we're gonna dive into your career, how you got to Avendra. You actually started your career as a training consultant with Productivity Point International before moving into a senior analyst role with Arthur Andersen. What did those early years teach you that you still take with you today? Jesse Messitte: You know, it's interesting. When I was hired by Productivity Point, it was to teach companies and people at companies how to use PCs, Excel, Access, computer things. And I was hired because, you know, I had the experience of teaching. Over the summers, I was a camp counselor teaching computers to little kids, and they thought that translated. I took one computer class in college, and wound up teaching computers as my first job out of school because I could communicate and teach, kind of those technical concepts. And so that ability to kind of look at things that are technical, whether it be a computer system or data, and be able to kind of translate that into layman's terms or into business terms from a technical standpoint, has really served me well. Where I've taken that and did that at Productivity Point for a couple years and then went to Arthur Andersen and was actually a developer. After teaching computers, learning—book learning and actually applying it, and then taking that to Hyatt and jumping into my hospitality career in 1996, working in their marketing department, working with systems and data analytics was really a good way to kind of jump into that with a strong background. David Millili: So you started to touch on it, but you then spent five years, as you mentioned, at Hyatt Hotels Corporation as the director of sales and marketing, information services. What did that role teach you about how better data and technology can support hotels, the sales, marketing, and the commercial decision-making? Jesse Messitte: It was great. I worked for a gentleman by the name of David Kong, who went on to be president and CEO of Best Western, and he hired me and spent five years there really just digging into how to leverage data and market and create a better customer experience for Hyatt customers. It was a great time to be there. If you think about 1996, the internet was just beginning. A lot of opportunity to kind of leverage technology to make the experience for the customer better. And it's very similar and parallel to what's going on now with AI, right? That sort of acceleration of technology, something new and fascinating to people. It's great to kind of plug into that and figure out how to make that work for hotels and hotel guests. Steve Carran: Absolutely. So this is pretty impressive. After you left Hyatt, you came to Avendra, and you've been there for 25 years, almost 28 or 26. You're now the vice president of strategy and business operations. What made you come to Avendra and stick around for almost 26 years? Jesse Messitte: That's a great question. Avendra was formed by five hotel companies, one of them being Hyatt. So I had the opportunity to move from Chicago back to Maryland where a lot of my family lived, and stay in the industry and stay working closely related to Hyatt and other hotel companies. And you know, it's interesting, I look at, like, 25 years with the same company, that's a long time, right? And you know, what's interesting about my job, and it's always been the case, as I've played different roles out of Avendra, is every day is different. There's a new challenge every day. As a hotel person and a hotel operator, well, now there's new challenges every day. It's never the same thing twice. And so that is really what gets me jazzed about getting up in the morning and really focusing on how to improve our customers' experience. David Millili: So for those who are not familiar with Avendra, can you share more about what you guys do? Jesse Messitte: Sure. We were formed in the hospitality space as a group purchasing organization, which really leverages collective purchasing power and allows multiple properties and hotels to purchase at scale. We do a lot more than just your typical group purchasing organization. We're really a professional procurement organization because we provide a lot more value than just a contract and a price. We have people that visit hotels, we have people that work with client level, management company level, and really help people improve their procurement department and operations. And so that's what Avendra really has set out to do, to be a leader initially just really in hospitality, and we've expanded beyond that over 25 years, and geographically we've expanded as well to be more of an international company. But that's where it started. It's really about group purchasing and providing added value around procurement. Steve Carran: That's great. Perfect segue for the next question. Now we're gonna go into the industry thoughts, the thought leadership portion of the podcast. So you mentioned group purchasing organization. For our listeners that might not be familiar with that term, can you talk a little bit more about that and how it helps hospitality organizations improve purchasing performance and also help them manage costs? Jesse Messitte: Sure. So, the whole concept on a group purchasing organization is to leverage scale and make sure that you get the best price. If you're buying for an individual hotel of 75 rooms, you're not going to get the same price as if you're a 2,000 room hotel, buying product. Or, if you're buying part of a management company that's 15 hotels versus buying in a group of 20,000 hotels, you're gonna get better pricing. And so we negotiate those prices on behalf of our customers, 20,000 plus, hotels and other types of hospitality properties with hundreds of suppliers, thousands of suppliers where we negotiate contracts and negotiate prices on their behalf. So that will help on the cost side. From an operations side, we have people who have in-depth hospitality and distribution and manufacturing experience to help with the overall experience of purchasing, whether that be cost control, being able to put in operational controls, making sure specifications are met, making sure there's quality around the product that's being served. We have people in place to do all of those sorts of things. David Millili: That's great. And so procurement and hospitality, it can be incredibly complex, multiple vendors, the systems, the processes to manage. What are some of the biggest challenges that operators face today, and how does e-procurement help address them? Jesse Messitte: That's a great question. Usually when people ask, "What does a vendor do?" My answer to that is, you know, we help customers buy the right product from the right source, and the rest is commentary, right? We want to help people buy the right product. What does that mean? Good price, specification for your brand, in a place where it's visible and there are controls in place around quality and there's an audit trail of what you're doing. So there's different ways to do that, and there's a lot of ways to get off track on that too, right? 'Cause of the complexity. 'Cause if you're running a full service hotel, there are a lot of suppliers you can buy from. There are a lot of things you need. There are a lot of things that happen pop-up meetings, shorts of things that you're purchasing, things that may become damaged, right? So we help mitigate some of that risk and really just help the procurement process be as smooth as possible. Steve Carran: That's great. And you mentioned there's a lot of procurement technologies out there, which is true. But how does Avendra help clients navigate those choices, and where do you think the biggest value for e-procurement is for hoteliers? Jesse Messitte: That's a great question. So there is a lot of technologies, a lot of technology in a hotel beyond just procurement, right? You've got PMS systems, revenue management systems, POS systems, right? And a part of the system stack is how do you manage procurement? How do you do your purchasing? So we offer to our customers advice on that in the terms of e-procurement systems. At Avendra, we like to say we're e-procurement system agnostic. What does that mean? We want to find the right thing for our customers. It's not always the same thing, right? Some customers might want to focus on very basic, I want to put in a purchase order and process an invoice. Some might want inventory management, recipe management, menu management. Maybe they're international and want multi-language, multi-currency. There's all kinds of different systems out there. We have a system at Avendra called iBuyEfficient that we operate. There's other systems out there too with a system called Nexus powered by Avendra, which is a BirchStreet system that we operate also. And then we have partners like BirchStreet, Craftable, Fohlio, and Reeco among others that we partner with. And with those, it's really finding the right fit for our customers. We have our own system, and we tout that system, but I know it's not perfect for everyone. It may not fit for everyone, and we want to make sure we direct our customers to what works best for them. Steve Carran: Did you say that you had a system that was iBuyEfficient? Jesse Messitte: It's called iBuyEfficient. Steve Carran: That's a great name. That's a great name. David Millili: So going down that path, what kind of e-procurement solutions does Avendra support, and what makes them different, and what does that actually mean for the day-to-day operations? Jesse Messitte: So our business is negotiating contracts on behalf of our customers and connecting our customers with our supply chain. We can do that through e-procurement, right? So with the partners that I mentioned and the applications and systems that I just mentioned, we can inject our suppliers into those systems, either through a punch out or a catalog, and allow our customers to use whatever system they want and get our pricing, right? It's about getting the right product from the right source and making sure we deliver that and our deals that we've negotiated at the right price. So we have a lot of flexibility around that in terms of working with these other companies and systems to make sure that if you sign up with Avendra, we're gonna make sure you get the Avendra product and the e-procurement product you expect to get. Steve Carran: That's great. And organizations and hoteliers, you know, I can imagine they're all at different stages of the procurement journey. For those that are looking to maybe modernize their process but just don't know where to start, what is the first step you would recommend and what should they prioritize? Jesse Messitte: Well, I think it starts even above that. It's like, what is the business objective, right? What are you trying to achieve? What is your current, you know, technology look like, and what makes sense to modernize or enhance, from a procurement process or from a systems standpoint? It's really—I'd start with the end in mind, right? What are you trying to do? And work backwards from that. And, you know, there are pieces that would then plug into procurement and e-procurement, and how does that fit within your tech stack, and what can you do? I mean, everyone wants to run to the newest shiny penny, right? AI-driven technology. But it has to work for your business. It has to work with what you're doing. You have to make sure it fits and make sure you approach it in a thoughtful way and not just kinda run towards the latest and greatest. Steve Carran: Well said. David Millili: Makes sense. And so looking ahead, how do you see procurement technology evolving, and what should hospitality organizations be doing to prepare for the future? Jesse Messitte: That's a great question. It's definitely evolving and it's evolving rapidly, right? I mean, I think five years from now, the way people do purchasing, even individuals as well as hotels, is gonna look a lot different. You know, today people use Amazon and other systems. It may be completely different. It might be all, you know, just speak what you want to buy and it gets created or what you purchased last month and what you have in inventory will generate what you need this month based on your future occupancy. There's a lot going on, a lot around AI. How do you recommend the right item? If someone puts the wrong item in their basket, can we tell them instantaneously, you know, you picked this item, but we really think this one would be better. You know, here's why and here's how much you'll save. Right? Those sorts of things, it's coming. The way the purchasing transaction takes place, I think over the next five years is gonna change drastically. Steve Carran: I agree. So Jesse, when hoteliers are looking for an e-procurement solution, what questions should they be asking the suppliers? Jesse Messitte: So the question is not so much necessarily around what suppliers need to do. It's about what the system will offer them from a control standpoint, from a budget management standpoint, from an approval standpoint, from an inventory standpoint, from a menu standpoint, from a user experience of doing the ordering standpoint. There's—these are the types of things I would look at when picking an e-procurement system that will work for you. I think, you know, one of the things that we talk about are all the different features on an e-procurement system, and if you're really leveraging the majority of them, you're gonna get the most benefit for using e-procurement, 'cause you're gonna see all your purchases in one place. You can get recommendations before you actually place the order, 'cause I can tell you what you bought last week that was a mistake, but I'd rather tell you before you hit place order, right? So those sorts of things are part and parcel to the e-procurement experience and in the questions I'd be asking if I were a hotelier trying to pick out an e-procurement system. David Millili: So if you're a hotel, a management company, an ownership group, what are some of the best practices that they should be following for e-procurement technology? Jesse Messitte: So really it's consistency of use, right? Making sure that you have standard operating procedures on how things should be done. I mean, there's a lot of data out there that people can look at. When I started my career at Hyatt, I remember a gentleman telling me, "You know, I don't want to look at numbers. I want everything to be red, yellow, green." And so I am just knowing what to do, right? I—and being a numbers guy, I took that to heart and basically, you know, went through my career saying, "I got to make sure that when I'm talking to someone, they can interpret it as red, yellow, green, and what they're doing right and what they're doing wrong." I would say that when you're setting up a process, making sure that it's very clear and there's not a lot of room for ambiguity and a lot of—not a lot of need to, you know, sift through data and analyze data, that it's served up to you in a digestible way is really critical, especially in a hotel operations environment where things are very fluid and there's a lot of turnover and things like that. You really want a tight operational procedure that sits on top of all the data and all the analytics that are happening kind of behind the scenes. Steve Carran: That's great. And one thing that we tend to always talk about on this podcast, I guess in the past probably year, David, is AI. And it hasn't got brought up a ton here, but I'm curious, how is AI changing e-procurement? Jesse Messitte: That's a great question. At Avendra, one of the things we're working on is the ability to surface what items a hotel should be buying based on past behavior and what items they've chosen to purchase. When you pick an item and put it in your cart, we can run analysis using AI to say, "Is that really the best thing that you should be buying?" The application of that product, if it's for a buffet setting, maybe there's another product that will work as well that's 10% cheaper, and give people alternatives. Also, in the current state where, you know, there's a high rate of inflation, everyone's cost-conscious and concerned about the price, is there an opportunity to trade down? Maybe you don't want that highest quality product, and maybe there's something a little bit below that will save you 30%. So being able to not necessarily make that decision for the hotelier, but being able to offer that up and be able to show that, is really a powerful thing to be able to do, and AI is kind of the engine behind that. Steve Carran: I love that. Educating the customer before they press that buy button. Very cool. So Jesse, I really like your background. You were in hotels, now you came to the technology e-procurement side. What advice would you have for somebody, maybe the younger generation of somebody who's in hotels right now that wants to make the jump from hotels to the technology side? Jesse Messitte: Yeah, that's a good question. So, the hotel experience is super valuable, right? Having that background and being able to talk to someone who's in that industry, even though as a procurement professional now, I'm not directly working in a hotel. Having that credibility is incredibly important. I would say just go broad. Make sure you have a broad background, whether it be different departments within the hotel or working in finance or technology. If you're able to kind of plug into those things, a broad background will help you, and you'll really be able to be a versatile tool with whatever company you're working for and where you're going. So my advice would be just keep it broad early and then narrow your focus a little bit later. Steve Carran: Great advice. Well said, Jesse. So Jesse, we've been asking you questions this whole time. This is where we turn the tables and let you ask David and I a question. Jesse Messitte: So when you talk to hoteliers, what is the most insightful thing you ask them? Steve Carran: Oh my goodness. That is a great question. David, do you want to take this one first? David Millili: Yeah, I guess, one of the things we just talk about a lot and we try to kinda peel back the layers is around, for lack of a better term, just kind of the personalization, the guest experience. And I think we try to figure out how hotels are tackling that, 'cause, you know, there's a lot of talk about personalization or almost in the same sense you said it, just the way it could recommend a different product for that hotel to save money. It could be the same thing with recommending a certain restaurant or a certain drink or things of that nature. So I think where we've pushed is trying to figure out how hotels are gonna tackle it. We've had a couple that I think are companies that I think are headed in the right direction, but for me, that's been one of the areas we've been trying to kinda figure out how hotels are gonna really actually act on personalization. Jesse Messitte: Right. Steve Carran: Yeah. Good answer, David. I think one of my favorite questions to ask hoteliers, we talk to a lot of hotels on the independent side, and it's really how they're establishing their identity and how they came up with that, and also how they become part of the community. What kind of offerings are they offering from a local aspect? Are there local partnerships? Do they offer local coffee down in the lobby? Do they offer local beers in the bar and restaurant? So, kind of that local food. I always love when I go to a restaurant and I feel like I'm really immersed in the culture of the city, or if I'm going to a hotel in nature in, like, Jackson Hole. I love to feel like I'm immersed in that culture. So, I always like to find out how hotels establish their identity and kind of how they got to where they are and really stand out from maybe a brand who has the same type of hotel room or same type of stay anywhere you go. Jesse Messitte: Right. And that's just interesting. The theme of both your answers was how does a hotel differentiate their guest experience? How do they set themselves apart? And which is what a hotel's operators should be focusing on. It shouldn't be, how do I order bacon, right? Steve Carran: Right. Jesse Messitte: It should be, how do I differentiate myself and give the guests the best experience possible? And then on the back end, the things that we're doing, where it's a little bit more standardized. So it's a nice kind of dichotomy between front of house and back of house. Steve Carran: Agree, 100%. I'd love it if that bacon was at the farm down the street, you know, a month or two ago. So I'm with you 100%. So Jesse, this has been a great conversation. Our producer, Jon, has been listening this whole time, so he's gonna ask you one question before we get you outta here. Jon Bumhoffer: Just kind of piggybacking on what you said there, you guys provide all that on the back end so it can help hospitality or hotels figure out how they differentiate and help them thrive. I'm curious, do you have any favorite examples or maybe case studies of like when somebody you've worked with the hotel and you've seen that what you guys do really help them do what you said, kinda take it to the next level and help them differentiate and help them kinda thrive? Jesse Messitte: Sure. I mean, one of the big benefits of using a vendor versus other GPOs or being self-op is that you have a relationship with people, right? There— We have a field organization that's geographically located that know the vendors, know the people at the hotel. So if a hotel has a problem, they know who to pick up the phone and call. I mean, that's a huge factor in what we do. It's not just price, price, price. It's also the relationship. And so I'll give you an example. A couple years ago, there were really bad fires in Maui, and our team stepped up and really just helped plug where they could issues that were coming up and fill in the gap from a supply standpoint, from a how do you support the staff at the hotel as well as potentially displaced guests, doing all we could do from a supply side of that. So there's little things like that. It wasn't so little, but things like that that we do every day where whether it's a late truck or damaged product or just making sure that people understand, "How do I buy the right product from the right source?" We've got people at property and above property that really support them. And so it, even though we're back of house, it translates to front of house. David Millili: That does it for another episode of The Modern Hotelier. Jesse, this is where you get to let people know how they can find out more about Avendra and get in touch with you. Jesse Messitte: Sure. There are lots of ways to get in touch with us. www.avendra.com.You can follow us on LinkedIn, and feel free to reach out. You can join Avendra. There's no cost to join Avendra, and we'd be happy to work with you and look forward to hearing from hotels and management companies out there. David Millili: Well, that does it for another episode of The Modern Hotelier, the most engaged podcast in hospitality. Whether you're watching or listening, we appreciate you and hope to be with you again soon. Thanks for joining us, Jesse. Steve Carran: Thank you.