NEW YORK? When Starwood Hotels & Resorts Worldwide declined to be a part of a groundbreaking web-based purchasing network set for launch by year?s end via Marriott International and Hyatt Corp., it wasn?t for lack of want- ing a procurement portal. It most likely just wanted a doorway that was already opened. Toward that end, Starwood and Zoho Corp., a California-based on-line hospitality marketplace, have formed a partnership expected to streamline the hotel chain?s global procurement process, which represents an estimated $3 billion in annual spending by the publicly traded lodging company. Formed a year ago, Zoho launched www.Zoho. com in March. Running on several service levels, Zoho touts an electronic end-to-end solution for buyers and suppliers that threads the procurement life cycle from planning to purchasing to liquidation of product inventory. ?We?ve probably talked to every provider out there. We?ve done detailed RFP process with all the technology solutions. We?ve looked at everything from joining other people to alliances to greenfield startups and the reason we are where we are today is Zoho. We think [it]is the best option for hotel owners,? said James Hyman, senior vp/group services for Starwood. With a global network of 700 owned, managed and franchised properties, the chain expects to see major cost and process efficiencies as it transitions to the new system. Hyman said a half-dozen Zoho attributes drew Starwood to the deal. These included its singular focus on hospitality as well as its supply-chain management and integrated technology solution as opposed to traditional purchasing and multi-stage tech solutions, which partially pushed Starwood away from aligning with Marriott. Hyman, who said Starwood had been approached as early as a year ago by Marriott, re-entered discussions with Marriott back in December regarding an e-procurement venture and the formation of a new company. It stepped away, said Hyman, based on four major issues including: a need for the e-procurer to be independent of the chains; to break away from a traditional purchasing mindset to a global supply-chain management model; to have a more-streamlined entity, unlike the multi-tier model of Marriott?s/Hyatt?s planned network that layers in GoCo-op, an e-commerce service provider; and to get where it needed to be quickly. ?We did spend a lot of time talking it through; we parted company, they then signed up Hyatt, and we?re off to the races,? said Hyman. Starwood is purchasing some $30 million worth of equity in Zoho, and it will have representation on the webber?s board of directors. ?We are purchasing a stake and getting another tranche of equity in exchange for the exclusivity of this relationship on a global basis and there?s a third piece based on spend going through,? said Hyman. In April, Zoho completed a funding round in excess of $50 million. Participants included Amerindo Investment Advisors, Ariba, Bayview 2000, Dell [Ventures] Computer Corp., Harrah?s Entertainment, Octane Capital Management, Quantum Industrial Partners LDC, as well as prior investors Sand Hill Group LLC and Garnett Capital. Soros Private Equity Partners LLC also is an investor. Rick Betz, Starwood?s senior vp/business development, noted unlike traditional purchasing programs that focus on squeezing a product price to fit the bottom line and often leverage against the suppliers, Zoho?s supply-chain management model would allow the chain to work at a higher level with suppliers to drive inefficiencies and expenses out of the supply chain. ?More of a win-win scenario as opposed to a win-lose proposition of a traditional purchasing-type venture,? said Betz. He expected Starwood?s current relationships with suppliers to be enhanced, and allow the chain to expand to other suppliers on a global basis. ?It?s designed to drive inefficiencies out of the whole supply chain. ?This also will allow us to provide better information for our management for decision-maki
