HOTEL BUSINESS: Hotel industry hit by low supplies

Leading hotels in the country are faced with a challenge of limited supply of raw materials and services. This is due to the limited capacity of Small and Medium Enterprises (SMEs) involved in the hotel’s supply chains.

Leading hotels in the country are faced with a challenge of limited supply of raw materials and services. This is due to the limited capacity of Small and Medium Enterprises (SMEs) involved in the hotel’s supply chains.

In addition to low supplies, the hostel industry is also frustrated by the low level of standards of the goods and services supplied by most SMEs.

“Our biggest challenge as a big hotel is finding constant supply of the high quality goods and services that we require. Sometimes the supplier we get does not have enough quantity to meet our demand ,”  Innocent Furaha , the Procurement Officer of Serena Hotel told the  meeting of leading hotels.

This was revealed during a two day workshop last week, organised by International Finance Corporation (IFC) for SMEs to support the smaller businesses in the hotel’s supply chains.

The workshop was attended by leading hoteliers  in Rwanda including Laico Hotel (former Novotel) and  Hotel de Mille Collines  with Small and Medium Enterprises owners and managers.

It  focused on improving the capacity of SMEs to take on larger contracts from leading hotels that come with high financial rewards.

According to the leading hotels, most SMEs in hotel’s supply chains do not produce enough to meet the huge demand of the hotels, forcing the hotels to outsource from neighbouring countries and abroad incurring high costs.

This in turn increases the cost of doing business limiting the development of the sector.

He added that the hotel is often forced to spend more money on purchasing  goods from abroad yet most of the SMEs  in the country are capable of producing and supplying most of these goods and services.

“Importing goods is expensive because you have to pay tax, transport and it takes time. All this is translated into higher prices for goods and services,” Furaha observed that while the hotel industry in Rwanda is growing, with better services provided by the hotels in the country, more investors will be interested in investing in the country and this will create more business opportunities to boost the economy.

He also noted that due to the fact that most suppliers with the SMEs do not have enough stock to meet the demands of the hotels, they are forced to sub –contract other suppliers who in most cases hike the prices of the products.

“This creates a problem because even the original supplier will also want to increase the price to make profit yet as hotels we have fixed prices for particular products. It also causes delays in providing the required service,” he said.

Hoteliers also raised concern over  the poor quality of standards of products and services provided by SMEs. 

It was also noted that as a result of not advertising and marketing their products and services, hoteliers end up importing most of the products that can be produced locally and obtained cheaply. 

Notably the hotel industry requires delivery of goods and services including food and beverages, laundry and dry cleaning services, security, furniture maintenance and Information Technology among others which are predominately produced and supplied by SMEs. 

“We welcome the partnership with SMEs because this will address the problems we are facing and create a win –win situation for both us,” said the General Manager of Mille Colline.

In a separate interview, Antoine Rutayisire  Manzi , the Director Entrepreneurship Development and  Business Growth at Private Sector Federation  admitted that  producing high quality goods is still a  big challenge for  SMEs.

He noted that most small and medium size entrepreneurs tend to concentrate on producing bigger quantities overlooking the quality of the products.

“Most SMEs emphasise quantity because they are looking at making more money, yet high quality products fetch high prices and high demand on the market,” he told Business Times in an interview on Thursday.

Rutayisire also observed that through the federation’s Business Development Services (BDS), PSF is offering technical support to SMEs to improve their operations and produce high quality goods.

The workshop between the hotels and SMEs was organised under the auspices   of IFC‘s Rwanda Entrepreneurship Development Program (REDP).