Why most hospitality acquisitions fail to integrate procurement

In hospitality acquisitions, management attention is rightly directed toward operational integration to ensure that there are no issues on the cutover date.

A huge amount of focus goes into migrating employee contracts and payroll, ensuring POS systems and booking platforms are updated and aligned, consolidating finance reporting structures and integrating PMS environments. This is not to mention the work required to align operating procedures and commercial reporting across the combined business.

With all the pressure to meet the cutover deadlines and ensure a seamless transition, it is all too easy to deprioritise procurement integration. This is despite procurement integration often being one of the clearest and most controllable drivers of EBITDA improvement within the acquisition business case.

As a result, even six months to a year after an acquisition completes, many hotel portfolios continue operating with fragmented supplier structures, inconsistent specifications, isolated purchasing processes and highly decentralised procurement decision-making.

The result is that many groups achieve revenue and administrative integration without ever fully achieving commercial integration.

The good news is that this is usually relatively easy to identify. Once an acquisition completes, there are several immediate indicators which determine whether meaningful procurement integration is realistically achievable, or whether the portfolio is still fundamentally operating as a collection of individual assets:

1. Is There procurement ownership within the new, combined entity?

One of the first questions is whether procurement is actually owned centrally within the group. This is not simply a question of who places purchase orders, but a question of who owns procurement commercially; who is accountable for determining where suppliers are chosen at group level vs. property level, who is accountable for choosing and managing these suppliers and most importantly…building and maintain the price structures.

Many hospitality portfolios with meaningful scale still operate without dedicated procurement leadership. Purchasing responsibilities often sit across operations, finance or individual properties, making integration difficult after acquisition.

This is frequently one of the clearest signs that procurement maturity has not evolved alongside the broader operating platform.

2. Is there a procurement system in place?

If procurement accountability exists centrally, the next question is whether the group has meaningful procurement infrastructure and visibility.

Many hospitality portfolios still operate through highly manual purchasing environments built around spreadsheets, emails and property-level ordering processes.

The challenge is not simply administrative inefficiency. Without procurement systems, it becomes extremely difficult to monitor supplier compliance, manage specification consistency, benchmark sites and analyse purchasing behaviour.

Without procurement systems, it is almost impossible to deliver meaningful procurement at scale. As portfolios grow through acquisition, this lack of visibility compounds rapidly.

3. Is there a shared catalogue architecture?

One of the most overlooked aspects of procurement integration is catalogue discipline. Two hotels in the same group may both purchase bacon, coffee, eggs and cleaning chemicals, yet still operate entirely different specifications, suppliers, pack sizes and ordering structures.

Without a well-managed central catalogue a procurement system is itself simply an ordering platform, not a platform that can leverage scale. As a result, group wide shared catalogue structures are often one of the clearest indicators that procurement integration has genuinely occurred.

4. Has the Group Had a Serious Conversation About Standardisation?

This is often where procurement integration becomes operationally difficult. Strong hospitality groups understand that not every part of the guest experience should be standardised. Local relevance, outlet identity and operational flexibility can all matter enormously.

At the same time, many portfolios carry significant customisation which creates little meaningful commercial or guest value. In practice, procurement fragmentation is often the historical legacy of a failure to ever have the conversation about who sets the standards, who designs the menus and the operating procedures, and where these need to be centralised or delegated to individuals within properties.

The strongest operators are usually not those who standardise everything. They are the ones who standardise intelligently.

Conclusion:

Procurement integration is often neglected when an acquisition is made because, unlike payroll, PMS migration or booking infrastructure, it rarely creates immediate operational risk on the cutover date. Ironically, this absence of urgency is often exactly what allows procurement inefficiency to compound quietly after acquisition.

The strongest hospitality groups typically treat procurement not simply as a sourcing activity, but as part of the broader operational architecture of the business. The good news is that these issues are usually highly identifiable and addressable once procurement integration is treated as part of the core acquisition and operating plan.

---------------------------------

About Argillan

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

We help operators and investors identify and implement procurement models that improve EBITDA performance while preserving the operational realities and individuality of hospitality assets.