Starwood Hotels & Resorts Worldwide, Inc. (NYSE: HOT) one of the largest hotel companies in the world, and Zoho Corporation, the premier online marketplace for the hospitality industry, announced today that the two companies have formed a strategic partnership to drive Starwood’s $3 billion annual spend in procurement through the Zoho marketplace. As a leading technology company specializing in e-purchasing and supply chain management for the hospitality industry, Zoho will lead Starwood in a transition from a traditional procurement-based structure to a fully integrated Web-enabled supply chain management system. Starwood will receive a significant equity position and representation on the Board of Directors of Zoho. Starwood also plans to make a significant equity investment in Zoho. Other Zoho investors include: Dell Computer Corporation, Ariba Inc., and Harrah’s Entertainment Inc.
Through its exclusive partnership with Zoho, Starwood expects to realize significant cost savings and process efficiencies, providing superior value to its hotels, vacation ownership properties, global sales offices and divisional headquarters. Zoho will mutually benefit from the relationship as Starwood brings an existing procurement organization with industry-specific expertise, relationships with vendors, and control over one of the largest purchasing volumes in the industry.
In addition to Starwood, Zoho is in active negotiations with several other major hospitality companies and hotel owner groups, and is poised to assume the leadership position in hospitality e-procurement.
Starwood’s approach to working with Zoho is in marked contrast to the competitive purchasing joint venture announced earlier this month commonly referred to as P-Co. Starwood chose not to participate in P-Co for many reasons including the belief that the purchasing model utilized was too rooted in traditional purchasing methods which do not truly leverage the maximum benefit an e-marketplace can deliver and it needed a solution that was operable immediately. As the world’s largest owner of hotels, Starwood plans to help position Zoho as the vertical solution representing the interests of hotel owners worldwide.
“Hotel industry purchasing has long been regarded as a painful process—inefficient and bureaucratic—and certainly ripe for a radical overhaul,” said Barry S. Sternlicht, Starwood’s chairman and chief executive. “Therefore, after almost a year of study, we chose a solution that was more than just an e-enablement of a traditional hotel purchasing system. Instead, we envision a global competitor, an independent e-commerce company for the hospitality industry specializing, initially, in representing worldwide hotel owner purchasing—that company will be Zoho.”
According to Sternlicht, Starwood chose to partner with Zoho because of their deep Internet technology, hospitality industry, and supply chain management expertise as well as the caliber of their seasoned management team. E-purchasing will lower Starwood’s costs and, importantly, enhance brand consistency.
“Zoho truly understands that procurement is more than just negotiating product price. Instead, they look at the total purchasing lifecycle, from planning and design, to operational supplies and services, and finally liquidation,” said Bob Cotter, Chief Operating Officer of Starwood.
“Starwood is recognized for their ability to run a worldclass hotel business in virtually every major market around the globe,” said Bill Fraine, CEO of Zoho. “We share a common vision on how technology can transform the hospitality industry. This agreement will not only help us drive efficiencies for Starwood’s owned, managed and franchised hotels, but also any hospitality organization—buyer or supplier—in the Zoho marketplace.”
Starwood expects its partnership with Zoho to be looked upon favorably by industry suppliers. While traditional hotel purchasing is predicated on simply leveraging size to reduce price, the Zoho model is supplier-friendly, focused on working with suppliers to eliminate inefficiencies throughout the supply chain such as excess inventories, excessive administrative costs and miscommunication during the purchasing cycle. Ultimately, effective supply chain management means greater savings for properties and lower operating costs for suppliers.
According to Starwood, its migration from a traditional purchasing approach to innovative supply chain management is not just a U.S. solution, but one that has applications worldwide. “As the world’s most global hotel company with systemwide revenues in excess of $11 billion, we see the same need for innovative solutions in all the regions where we operate,” concluded Cotter.
Zoho (http://www.zoho.com) is the premier online hospitality marketplace. With no software to install, upgrade or maintain, Zoho empowers purchasing organizations and suppliers across all segments of the hospitality industry to streamline the entire procurement lifecycle—from planning and design, to procurement of operating supplies and services, to liquidation of used and surplus goods. Unlike e-purchasing sites, Zoho helps hospitality organizations strengthen their procurement processes by eliminating inefficiency and reducing costs across the entire supply chain—including transportation and banking. For more information, visit Zoho on the Worldwide Web at http://www.zoho.com, or call Zoho world headquarters at (408) 469-4200.
Starwood Hotels & Resorts Worldwide, Inc., through its St. Regis, Luxury, Westin, Sheraton, Four Points and W brands, is one of the leading hotel and leisure companies in the world with more than 700 hotels in 80 countries and 120,000 employees at its owned and managed properties. SOURCE Starwood Hotels & Resorts Worldwide, Inc.