JurysDoyle Group

Outsourcing Procurement Services

What remains is a substantial group of 11 hotels that, according to media reports, currently earn €50 million annually: There are three leading hotels in Ireland - the Westbury and Croke Park hotels in Dublin and the Jurys hotel in Cork. British hotels include the Kensington, Clifton Ford and Great Russell Street hotels in London and a hotel in Bristol. There is a hotel in Boston, and three in Washington. 

One of Ray Shannon's major priorities is taking responsibly for an initial capital expenditure budget of €100 million for upgrading and refurbishing the existing hotels, moving them from mid Four Star to top of the Five Star ranking. "This level of spending reflects the desire and commitment of our Chairman, Bernadette Gallagher, to create a well-defined high-quality market positioning for our hotel group. Within an overall group identity, each hotel will stand on its own name and have a distinctive product identity. 

"The commitment to create top-of-the market hotels, each with its own distinctive identity is a creative design process that is driven by a team of the Chairman, the new CEO, Bill Walshe an interior designer and project managers. I don't have an input in selecting the furniture and furnishings or the quantities and, because they usually involve exclusive designs, supplier selection is made before I enter the picture. They will be mainly the top end furniture, furnishings and fittings suppliers in London and The hotel group has a long history. A lodging house opened by William Hill, a commercial traveller, in College Green, Dublin, in 1837 grew steadily over the years until it became (particularly with the acquisition of the Doyle Hotel group) the biggest and best-known Irish-owned hotel group. 

In 2005, the group was taken private by the Doyle and Beatty families and underwent a radical reconfiguration, which involved the highly profitable sale of Jurys Ballsbridge and Towers and the Berkeley Court in Ballsbridge, the Burlington and the Montrose. The 20 Jurys Inns were sold to Quinlan Private in early June 2007.

What remains is a substantial group of 11 hotels that, according to media reports, currently earn €50 million annually: There are three leading hotels in Ireland - the Westbury and Croke Park hotels in Dublin and the Jurys hotel in Cork. British hotels include the Kensington, Clifton Ford and Great Russell Street hotels in London and a hotel in Bristol. There is a hotel in Boston, and three in Washington. 

One of Ray Shannon's major priorities is taking responsibly for an initial capital expenditure budget of €100 million for upgrading and refurbishing the existing hotels, moving them from mid Four Star to top of the Five Star ranking. "This level of spending reflects the desire and commitment of our Chairman, Bernadette Gallagher, to create a well-defined high-quality market positioning for our hotel group. Within an overall group identity, each hotel will stand on its own name and have a distinctive product identity. 

"The commitment to create top-of-the market hotels, each with its own distinctive identity is a creative design process that is driven by a team of the Chairman, the new CEO, Bill Walshe an interior designer and project managers. I don't have an input in selecting the furniture and furnishings or the quantities and, because they usually involve exclusive designs, supplier selection is made before I enter the picture. They will be mainly the top end furniture, furnishings and fittings suppliers in London and Paris who supply the world's leading hotels. My job is to negotiate with new suppliers, who are aware that they have got or are close to getting the business and finalise the deal. 

"My approach has been to plan well in advance and make contact with as many suppliers as we are likely to do business within this top end bracket and get their brochures, catalogues and price lists so that we would have an informed overview of the market and market prices on which to base our negotiations. This gives us their market price, which can be worked back to a trade price and then to a volume price. Once we have given the first order to a supplier, a relationship starts to develop which comes into play with subsequent orders."

Although the Jurys Inn chain has been sold to Quinlan Private, Shannon's is one of three departments that has been contracted to supply shared services to the Inns company - Central Purchasing & Procurement, Accounts and Central IT. This arrangement will operate for at least the next nine to twelve months and then will be reviewed by both parties. In general terms, this means that Shannon is providing the same service to the Inns now as he did when they were part of the JurysDoyle Group.


This means fundamental change in the purchasing and procurement function First, Shannon's department is now a contractor to the inns. "This means that we are servicing two quite distinct businesses, rather than one business with two brands. Previously, while there were differences between the hotels brand and the inns brand, there were large areas of commonality Now, with the Hotels moving substantially up-markets, while the Inns are an economy, cost-driven product, the differential has widened considerably, with mainly different suppliers for each business and this has obvious implications for purchasing." 

Providing a contract purchasing service for the Inns is part of a strategy of developing JurysDoyle's significant purchasing strengths, expertise and capabilities to offer a specialist outsourcing purchasing service to the hotel and leisure industry. "We have a unique offering as a hotel group offering this service to independent hotels. We are currently providing this service to a hotel outside the group and are in discussions with others and there is great potential for developing this service. It benefits the hotel that uses our service by giving them professional control and structure, over their purchasing operation, supplier auditing and full documentation and certification - and substantial savings, especially on their food and beverage purchases. It benefits JurysDoyle both as an additional revenue earner and in increasing our purchasing muscle."

Shannon is chairman of a consortium of seven hotel groups in the UK, with a combined annual spend of around ST£65 million in eleven categories of food, beverages and disposables.. "We are currently out in the market with the first two tenders, for disposables (worth ST£5 million) and office supplies (ST£1.5 million). On these two contracts alone, the consortium expects to secure a combined saving of up to £400,000. We expect to be joined by two additional large UK hotel groups by the end of the year, which would bring our annual spend to £100 million, which would position us as a significant purchasing force in the UK." The consortium is called Mayfair Purchasing Group.

As Purchasing and Procurement Manager, Ray Shannon answers to the group's CEO, recently appointed Bill Walshe, who comes to the group from Jumeirah, he was the Dubai hospitality company's chief sales and marketing officer. Last year, Shannon's operational purchasing budget was worth around €70 million, of which food and drink would be the biggest item, accounting for over 40% across Ireland and the UK


He has a staff of six: a deputy manager, and executives covering areas such as capital spending, service contracts, utility procurement, print and stationery, new openings and corporate travel. The executives have all built their own specialist experience in these areas. They have a dual responsibility: in addition to these specialisations, each executive also has designated property responsibilities and deal with their day-to-day issues. There are cost controllers in each hotel (and inn), who manage the back of house areas - stocktaking, placing orders and taking deliveries. They handle the initial receipting of goods and pass on the receipt for payment verification -- everything is done by fax: no phones.

Six years ago," relates Shannon, " we invested over €4 million in installing integrated SAP across the group in all business areas (i.e accounts, payroll, debtors etc), both at property level and head office level and all purchasing is controlled through SAP. We control all the purchasing through SAP so nothing moves without it going through the system. The purchasing is centralised and we have full compliance across our business and across the Inns group where, as I said, we continue to control the purchasing. SAP was a hard put-in but it is now an indispensable and valuable element of our business.

"Authorisation is built into SAP, so that everything except food must be authorised through the system by a general manager, accountant or senior manager. There are different levels for this. Food flows straight through because it's not something that we hold up for authorisation because of the perishable nature of food and because it is almost always an immediate requirement; the cost controller places orders and it automatically goes to the supplier's fax. 

"I came into the job at around the time that the board had given the green light for SAP. The purchasing element of SAP was one of my first major jobs as purchasing manager and took us the best part of ten months before we rolled it out. Once we had bedded it down, it proved highly satisfactory: it did the business. SAP was designed primarily for industrial and commercial business and was not really designed with the hotel and leisure industries in mind so we needed to do a certain amount of adaptation and customisation. 

The Doyle group was the first in Ireland and the UK to introduce it in the way that we did."

SAP proved to be a very good investment for the group. "It repaid itself within two years - and this is just on savings produced by central purchasing. For example, one of the significant achievements of my department has been achieving a key target of reducing food and beverage margins by 4%-5%, while fully maintaining standards and quality, which represents significant additional profits across the group. 

Another cost benefit that resulted from SAP is that we have increased retrospective payments across Ireland and the UK fivefold, and they currently stand at over three times the annual costs of running the purchasing and procurement department
"There have also been major savings in other departments. The purchasing savings are ongoing and at regular intervals I present both internal and external audits to the board that comprehensively validate this. Over and above savings, the fact is that there is no way that we could control 30-plus properties without a central system."

Excluding the special capital expenditure budget, JurysDoyle deals with some 2,000 product, services and utilities suppliers -- 1,200 in Ireland and 800 in the UK. This has been reduced from 2,700 in Ireland over the past seven years but numbers in Britain have increased as the group has increased its properties there. The numbers are fairly normal for the multifaceted purchases of a hotel group of JurysDoyle's size. 

Shannon doesn't operate a formal supplier selection process. "We've been in business for a long time. The customised central purchasing system we use is an evolution of the central purchasing system set up by Doyle hotels in the mid 1980s, one of the first in the hotel industry in the UK and Ireland. So we know the market pretty well and we have a clear vision of our requirements. Ireland, being a comparatively small country, you soon know who are the suppliers with high standards and who are reliable and offer good value. I devote a certain amount of my time looking at potential new suppliers, products and innovations. I'm always interested in looking at a supplier with a product or service offering that promises benefits over and above what we are currently getting. 

As a purchasing manager, Ray Shannon is involved with both the Irish and British markets. Does he find that Irish and British suppliers are different in their approach to business? Totally different, he says. "They are two different business environments. In Britain, many sectors are dominated by a very small number of large suppliers. Undoubtedly, Ireland is steadily moving closer to the British model in this respect but at present there is a wider supply base of large, medium and small companies, so there is greater choice and, with many small companies, Irish suppliers offer a more personal business relationship.

"The Irish supplier market is still informal and business is largely done on a personal basis. Irish suppliers tend to connect well with their customers and work on the basis of putting their personal reputation on the line, rather than taking a wholly contractual approach. 

With British suppliers, it is more formal, with the emphasis on fairly extensive written contracts, even for comparatively small orders. There are merits in both approaches, of course. The personalised way of doing business does give Irish suppliers an advantage when all things are equal, both in Ireland and abroad.

"We have a good relationship with our suppliers and we have been active in keeping our suppliers fully up-to-date on the changes and developments within the group and appraising them of the implications in terms of supplying products and services. We do business on the basis of having an honest and fair relationship. A company gets nominated if it comes to us with a good track record and something that is new and interesting and relevant to us -- at the right price. However, it is important for a potential supplier to have not only a good product but also an understanding of our business and have taken the time to identify just how they will add value for us. I believe that good suppliers are due loyalty. When I have a supplier who is doing a good job for us, I will always advise them of opportunities and also tell them that I've been given a better offer by a competitor and see if they are prepared to match it.

Shannon says that he particularly welcomes a supplier who is pro-active in coming forward with relevant new products and services. "In general, there's not enough of this kind of initiative partly, I suppose, because suppliers don't often have time (or perhaps make time) to float potential new business opportunities with their customers. Part of my brief is to stay abreast of what's happening in the marketplace, what new products and services are emerging, what kind of innovations should we be considering. So, in addition to our own ongoing research, I expect suppliers to come to me with their innovations.

"Innovation is important in our business. For example, we have been very successful in bringing new food products, such as sous vide and other high quality, fresh, ready-to-go foods produced to our specifications, which JurysDoyle have pioneered in Ireland in the inns."

Ray Shannon has been purchasing and procurement manager with the group for seven years. He has spent his career to date in the hotel industry, starting in the Burlington hotel as a trainee hotel manager and working up the ranks within the Doyle group - as trainee manager, junior manager, assistant manager in catering and in banqueting, night manager. After working for five years in hotels around Ireland, he returned to the Doyle group in 1988 as expense manager with a brief to assess the impact of expenses and identify savings across all areas of purchasing, payroll costs and other areas of expenditure. "This was an interesting assignment," he recalls, "because the group was well managed it was not a matter of sorting out a problem area but refining an already highly sophisticated structure." He was subsequently finance manager, and then deputy manager for the Burlington with responsibility for finance and HR and IR . 

This background is invaluable in his present position. It is difficult to imagine a purchasing professional doing this job without a detailed knowledge of the complexities and dynamics of the hotel industry, which are very different from other commercial operations. "The strength that I brought was these twenty-plus years of experience of most of the key functions of a hotel. 

A professional purchasing specialist who did not have this industry knowledge would have found it very difficult to succeed: almost all senior hotel department managers need to have a solid background of hotel industry experience." 

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