Why Independent Hotels Are Structurally More Exposed to Procurement Inefficiency

In the previous article, we outlined how procurement inefficiency typically results in a hotel leaving 6–16% of EBITDA on the table.

While the issue exists across the sector, it is consistently more pronounced in independent hotels and portfolio groups.

The reasons are structural—but critically, fixable.

Lack of Awareness and Access to Proven Models

Branded hotel groups are acutely aware of procurement as a driver of profitability. As a result, most major franchisors have developed procurement platforms for their franchisees. These platforms offer pre-negotiated pricing, defined supplier frameworks, and increasingly integrated digital tools.

This gives Branded hotels two clear advantages:

• Access to a platform with a defined view of what “good” looks like

• Established supply chains, SKU catalogues, and pricing structures to deliver it

Independent hotels typically operate without either of these advantages. In many cases, there is no benchmark for pricing, no structured procurement model, and limited visibility of the opportunity.

As a result, inefficiencies persist—not through neglect, but through lack of reference.

Lack of an Integrated F&B Approach: From Menu Design to Supply Chain Reality

One of the most significant structural differences sits within food and beverage. In branded environments, F&B is engineered end-to-end. Menus are designed with cost in mind, SKUs are rationalised and standardised, and supply chains are built to deliver both consistency and margin. 

In independent hotels, this process is rarely integrated. Menus are typically driven by concept, creativity, and guest experience—which are all essential—but are not aligned with operational and financial realities. The supply chain is then built around the menu, rather than designed alongside it.

The result is predictable:

• Fragmented supplier bases, as menus pull products from multiple sources

• Inconsistent and over-specified products, often misaligned with the target guest

• Limited negotiation leverage, as a broader SKU base dilutes scale

Over time, this lack of integration—between guest proposition, menu design, and supply chain—creates structural inefficiency. Many independent hotels are already at a disadvantage before they even begin supplier discussions.

Relationships Versus Commercial Discipline

Independent hotels often build strong relationships with local suppliers. These relationships can be a genuine strength—supporting provenance, flexibility, and a sense of identity that is difficult to replicate in branded environments. 

However, they can also reduce commercial tension; pricing is less frequently benchmarked, supplier performance is less formally reviewed and cost increases are more readily accepted.

By contrast, branded operators are typically systems-driven and objective. Supplier relationships are managed within defined frameworks with regular market testing and structured performance evaluation.

The difference is not intent—it is discipline. Over time, that difference translates directly into EBITDA Margin.

Misplaced Concerns Around Procurement, Standards and Quality

A common concern among independent operators is that procurement optimisation will erode what makes their business distinctive. This is particularly true in F&B, where individuality and local character are central to the guest proposition.

As a result, procurement is often left untouched, on the assumption that any intervention would require:

• Standardisation of product, leading to bland and undifferentiated offers

• Loss of local suppliers, with a corresponding decline in provenance and service quality

• Reduced flexibility and creativity in menu design

In practice, this is a false trade-off. Effective procurement is grounded in a clear understanding of the target guest and the role of F&B within the overall proposition. Once this is defined, the focus shifts to aligning the supply chain to consistently deliver against it.

Procurement, when properly structured, does not dilute quality or identity. It actually reinforces them by improving consistency, strengthening execution and ensuring that the guest proposition is delivered reliably.

Misplaced concerns about scale:

Scale is often cited as the primary reason independent hotels cannot achieve competitive pricing.

It is true that branded groups benefit from aggregated purchasing power. However, scale is only one component of effective procurement.

In practice, pricing inefficiencies in independent hotels are more commonly driven by:

• Lack of benchmarking

• Limited market testing

• Supplier structures that favour continuity

Independent hotels can easily achieve comparable gains to mature procurement platforms through:

• Introduction of competitive tension into existing supply arrangements

• Frequent supplier feedback based on market benchmarking

• Targeted and mature rationalisation of the supplier base and SKUs

Bringing the Impact Into Focus

When these structural factors combine—limited visibility, unstructured procurement, relationship-driven purchasing, and perceived constraints around scale—the result is a higher exposure to procurement inefficiency.

Returning to a representative mid-sized hotel:

• £2.0m revenue

• £300k EBITDA

• ~£300k cost of goods sold, predominantly F&B

The previously identified pricing variance of 8% to 22% on core lines is not only present in independent hotels—it is often at the upper end of that range.

For independent operators, EBITDA impact is typically far higher than in branded hotels.

Closing Perspective

Independent hotels are not underperforming because they are weaker operators.

They are underperforming because they lack the structural procurement support that branded groups have spent decades building. This creates a consistent and material gap in financial performance—one that is often hidden in plain sight.

Addressing this gap does not require a move towards standardisation or loss of identity. It requires the introduction of structure, discipline, and visibility into an area that has historically been under-managed.

For many independent hotels, this represents one of the most immediate and accessible opportunities to improve profitability.

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About Argillan

Argillan works with independent hotels and hospitality portfolios to bring structure, visibility, and commercial discipline to procurement.

Contact us to learn how we can help operators quantify the scale of opportunity and deliver meaningful EBITDA improvement—whilst making their business even more distinctive.