Hilton Hotels Corp. unveiled a business-to-business (B2B) marketplace Thursday that will be powered by PurchasePro.com’s B2B e-commerce engine.
The new hospitality procurement network, slated to be launched this summer, will ultimately handle the bulk of the company’s US$1.5 billion in annual purchases for goods and services from thousands of its suppliers. Both Doubletree and Embassy Suites hotels, which are owned and operated by Hilton, will also use the network for supply ordering and management.
According to a joint statement from Hilton and PurchasePro, “significant purchasing and operational benefits” are anticipated through the exchange, which will combine the purchasing power of Hilton’s hotels with that of other hospitality companies. The goal of the venture is to link buyers to suppliers while providing preferred pricing through bulk purchasing.
The exchange will also provide clients access to the goods and services of more than 21,000 businesses.
Hotels Slow To Come Online
The hotel industry has been particularly slow in shifting to online commerce. Although Hyatt and Marriott hotels announced a similar online exchange last month, the industry has largely used the Internet exclusively for reservations and information about their specific properties.
The new hospitality B2B marketplace closely mirrors the models being used in other businesses, including the automobile, food service, energy, and construction industries. Hilton’s participation in the new marketplace is significant in that it is one of the oldest and most established hotel companies in the world.
Hilton Shows Leadership
Recently, Hilton has emerged as an e-commerce trailblazer for the hospitality industry. The new marketplace comes on the heels of last month’s announcement that Hilton International would partner with two European hotel companies, Accor and Forte, to provide online bookings and reservations, as well as a B2B system for wholesale purchasing.
With Hilton taking the lead in using e-commerce and commanding more negotiating power with suppliers, some industry observers believe that other major players in the hotel industry may soon follow suit with their own B2B exchanges.
PurchasePro has seen its own financial fortunes rise and fall with the fickle nature of the stock market. Even with Wall Street’s intermittent B2B sell-offs, the company continues to form new alliances and launch new marketplaces. Just weeks ago, PurchasePro unveiled a deal with Bidcom, Inc. to form a B2B marketplace for the construction industry. Despite the company’s new business deals, shares of PurchasePro have declined 50 percent.
Even after the announcement that revenues had increased by 71 percent during the first quarter of this year — although it did report a loss of $8.3 million — investors continued to snub its stock. As a result, some new investors have shied away from PurchasePro, particularly since it is believed that the company will not achieve profitability before Q4 2001.
Wall Street’s skepticism has not stopped PurchasePro from entering into major deals. The company is developing exchanges for such industry heavyweights as America Online, Sprint and Office Depot.