Marriott, Hyatt Launching Joint Procurement Co.

FRAMINGHAM (05/02/2000) - Marriott International Inc. and Hyatt Corp. - two of the largest hotel chains in the U.S. - today announced plans to launch a new company later this year that will serve as an electronic-procurement network for their businesses.

Rather than root around separately to buy towels, toilet paper and thin mints for their various properties, Washington-based Marriott and Chicago-based Hyatt said they will combine their buying power and have suppliers bid for business at a combined total of more than 2,000 hotels and resorts worldwide.

The two hotel chains plan to use a business-to-business network that was created by GoCo-op, a Maitland, Florida, software vendor and application-hosting firm. The network will will use XML technology and SAP AG's enterprise resource planning applications to process real-time transactions for the hotels.

Marriott and Hyatt said they expect to buy more than $5 billion worth of supplies each year through the new company, and that other hotel chains may be welcomed as members in the near future. Meanwhile, GoCo-op said it expects to have thousands of suppliers bidding against each other in the newly created Web marketplace.

Kevin Mitchell chairs the Lafayette Hill, Pa.-based Business Travel Coalition, which just formed an electronic-business forum that includes General Motors Corp., Ford Motor Co., DaimlerChrysler AG and Black & Decker Corp. The forum plans to investigate online group purchasing of everything from corporate travel to industrial supplies.

"It's clear the enthusiasm for this is coming from the top down in these corporations," Mitchell said. "The (chief financial officers) and the IT managers are saying, 'we're not going to miss this party.' " Mitchell said he believes that virtually every company will have to form buying coalitions that look to create purchasing strength in numbers as a way to ratchet down supplier costs. He said such coalitions are forcing businesses to form partnerships with some of their fiercest rivals - competing on some levels while cooperating on others.

"If you can remove systemic costs from your operation, why wouldn't you do that?" Mitchell said. "And the Internet is the perfect tool to get distributor costs out."

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