Strong growth in corporate profit and inbound trips by non-US residents have supported linen rental price growth during the period
Los Angeles, California (PRWEB) September 24, 2014
The hospitality linen rental market has a buyer power score of 2.8 out of 5, reflecting market conditions that are relatively favorable for buyers. IBISWorld market research analyst, Kiera Outlaw, says, "Demand for linen rental services has increased during the three years to 2014 due to rising corporate profit, consumer spending and inbound trips by non-US residents, all of which have helped support strong price growth." Nevertheless, low specialization, switching costs and supply chain risk have all helped to support buyer power during the period. Major vendors in the market include Alsco, Cintas, G&K Services and Mission Linen.
Unfortunately for buyers, price growth has been one of the most significant hurdles when securing linen rental services. "Although linen replacement costs have declined, suppliers have increasingly invested in newer laundering equipment," says Outlaw. These machines are expensive and are depreciated over three to 10 years, indicating that suppliers are lifting their rental prices to try to recoup some of those costs. High price volatility has also hampered buyer power because it has weakened buyer confidence when budgeting for hospitality linen rental services. The market's moderate concentration has also adversely affected buyer power. The rising trend of merger and acquisition activity within the market has lessened the pool of available suppliers. While price-based competition is stiff, buyers are increasingly seeing less price differentiation across suppliers.
Despite these trends, a few market characteristics help support buyer power during negotiations. Low specialization has benefited buyers because it indicates that, despite the declining number of suppliers, buyers can source their linen rental needs from a range of suppliers. Furthermore, low switching costs have made it easier for buyers to source a new supplier when needed. The average low risk throughout the supply chain has also benefited buyers because it indicates a reduced chance of supply interruption from suppliers. However, prices are forecast to continue climbing through 2017; thus, buyers are encouraged to secure multiyear agreements now to lock in current rates and cap price increases. For more information, visit IBISWorld’s Hospitality Linen Rental procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of hospitality linen rental. Suppliers provide laundered items, such as table and bed linens, towels, mops and mats, on a rental or contract basis. Hospitality linen rental services are geared toward hotels, motels and restaurants. This report excludes uniform rental as the service is considered industrial, as well as other commercial and industrial laundry and linen supply services, such as for hospitals and prisons.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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