ABC analysis in the hospitality industry
Definition of MICE in the hotel industry
ABC analysis is a business management tool often used in the hospitality industry to categorize items, suppliers or even customers from A to C based on their contribution to the company’s total sales or costs. Category A items account for the largest share of sales, while C items make the smallest contribution. This method helps companies to allocate their resources efficiently and focus on the most important elements of their business.
Procedure of the ABC analysis
The implementation of an ABC analysis in the hospitality industry takes place in several steps. First, all relevant articles, suppliers or customers are listed and sorted according to their financial contribution (e.g. turnover or costs) over a specified period. Typically, around 10% of items account for 70-80% of total sales, while the majority of items only make a minimal contribution to sales. After categorization, measures are developed to negotiate more intensively with A-elements, while costs could be reduced or removed from the range for C-elements.
Sample calculation
In a practical example, a hotel could analyze its beverage suppliers. Let’s assume the hotel buys from 30 different suppliers. After carrying out an ABC analysis, it turns out that three of these suppliers account for 75% of the total purchase value of the beverages. These suppliers fall under category A and would be subject to more intensive price negotiations, while less important B and C suppliers would be reviewed in terms of conditions and necessity.
Importance of ABC analysis in the hospitality industry
ABC analysis is particularly important in the hospitality industry as it helps managers to reduce the complexity of inventory management and supplier relationships and make data-driven decisions. This leads to a more efficient use of budgets and an improved negotiating position with suppliers. Especially in a highly competitive and low-margin environment such as the hospitality industry, this can be crucial to increasing profitability and improving operational efficiency
Why is it so difficult to find quality, speed and price at the same time?
The ABC analysis offers a structured method for setting priorities and working more efficiently in the complex world of the hospitality industry. By focusing on the most important sales or cost drivers, companies can make optimum use of their resources, reduce unnecessary costs and ultimately increase their competitiveness and profitability. It is an indispensable tool for any hotel or restaurant that is striving to optimize its operations and strategically focus on long-term success.
