With supply chain issues, labor shortages and inflation affecting nearly every industry due to the pandemic, many tools and technologies have been introduced to alleviate some of these disruptions.
Some hotels are now turning to a new solution from technology company Reeco that uses AI to help them find savings—both in time and money—in the procurement process.
“Reeco is a purchasing platform based on AI,” said Omri Shalev, cofounder/CTO, Reeco. “Think of it like Amazon, where you can easily search for the product you want, and you can see all of the suppliers in one single place and click on the product you want. All of the prices are in real time.”
The company started when Shalev met his business partner, Henrik Shimony. “My partner is a hotelier and has been for all his life,” he said. “His father and grandfather built a chain of hotels in Israel.”
Technology from Reeco uses AI to help hotels with the procurement process.
Like many kids who grow up in the hotel industry, Shimony did many jobs around the properties. When he became the GM of a property, he was doing all of the purchasing. “He purchased through many suppliers through texting, emails and calling sales reps,” said Shalev. “The hotel looks beautiful from the outside, but from the inside, people are just struggling to make the operation work.”
When Shimony told Shalev how purchasing worked, the software engineer couldn’t believe it and thought there had to be a better way. “We started checking in Europe and the U.S., and after COVID, we discovered that sometimes hotels don’t even have a purchasing manager,” said Shalev. “It is the chef who does all the heavy lifting of placing those orders. Imagine how a chef who has a meal to cook for 300 people is going to find the time to do price negotiation and choose the right supplier because this is a very fluctuating market.”
Without staying on top of prices, a property can end up paying a lot more than it needs to for the products it purchases.
Once the first purchase is made, Reeco’s system starts learning the user’s habits. “This is where AI comes into play,” he said. “In the first 30 days, we try to get the customer to use the system, but once we have enough data on the user, the algorithm keeps on optimizing, offering them more and more suppliers and better alternatives for the products they are using right now.”
The company built one unified catalog of more than 100,000 products. “You just pick the products you want, and behind the scenes, there’s a lot of magic going on making sure that every single time you check out, it creates the optimal basket for you,” said Shalev.
With every hotel having its own unique qualities, the AI learns each one’s preferences. “It starts learning your habits and who you are based on your size; the numbers of rooms you have; your spending; and the types of suppliers that you choose,” he said. “If you only work with huge ones, you probably don’t care about the type of fish you get. But if you work with a lot of local suppliers, you are very picky with the things you choose.”
Along with product ordering, the Reeco platform offers paperless accounts receiving and payable. The customer pays the company for all of the orders. “We are the financial entity at the end of the month, and we spread your money to the supplier,” Shalev said.
Reeco also treats each of its suppliers as a partner. “Suppliers are very important in this equation,” he said. “It’s not about getting them into a cage to fight with each other. We need to make sure that they are happy as well, and they are getting what they need. We want them to become more profitable so they will bring down the prices.”
Somerset Hills Hotel in Warren, NJ, recently started using the platform for its purchasing. Scott McArthur, the property’s GM, said that it has already helped his property streamline the procurement process, cut down on costs, save time and reduce food waste. “The process is simplistic where you preload your recurring needs, and Reeco’s tool will identify which vendor should be used among their suppliers,” he said.
