Reporter's Notebook: NBTA Scrutinizes Mtg. Contracts
Simply sending a prospective contract to a corporate legal department for review no longer is a viable option for many companies that strategically manage meetings, buyers said last month during a panel on strategic contract management held at the annual convention of the National Business Travel Association in San Diego.
The majority of meetings contracts must be signed 14 to 30 days after being submitted, and "time-sensitivity wreaks the most havoc" with legal and procurement departments that are accustomed to less-complex transient contracts, said Kari Knoll Kesler, co-chair of the NBTA groups and meetings committee and manager of meetings and events for Honeywell Inc.
Meetings also include an average of up to 12 contracts per event, Kesler said, which can add complexity. "If you don't know how many contracts will come in, how will you know how many resources to make available?" Kesler asked attendees.
Michele Bryant, director of travel procurement for Deloitte Services LP, said her company split the meetings management process to three departments: sourcing, planning and fulfillment. Bryant said the sourcing department handles 1,500 contracts a year and is implementing automatic electronic signature authority for low-value, low-risk contracts to speed the process.
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From a supplier perspective, Marc Brett, director of sales recruitment for Hilton Hotels Corp., stressed the importance of shared risk in contracts. Hotel sales representatives are receiving meetings contracts created by corporate attorneys who are not lodging experts, he said, which requires more time and review by hotel attorneys. "All I do is negotiate master agreements," Hilton's Brett said.
A major challenge to implementing master agreements with a corporation is the hotel industry's franchise model, Brett said. Franchise properties have their own contract procedures, and buyers may need to renegotiate points already approved in a master agreement. Individual properties need to re-read contracts for each meeting as market conditions change, he added.
Buyers should use a master agreement as a starting point, Brett advised, and communicate to hotel representatives how contracts are created within the company.
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As corporations look for more opportunities to leverage combined transient and meeting volumes, Seattle-based Washington Mutual in 2003 developed three simple questions attached to RFPs sent to vendors. The bank asked if a hotel would offer transient rates for up to 50 rooms per night, if it would waive meeting space charges if room nights were booked and if a hotel would accept a Washington Mutual contract template.
Margaret Tangen, director of corporate travel for Washington Mutual, said in 2004, 46 percent of hotels agreed to the three terms, with half of those placing such conditions as availability on the agreement. Hotels also asked to review the contract templates before agreeing. This year, Washington Mutual required hotel vendors to complete the questionnaire, built deeper relationships with hotels suitable for meetings, she said, and is tracking volume and establishing a preferred meetings hotel list.
Peter Moen, vice president of business development of Minneapolis-based Carlson Marketing Group, advised corporations to begin leveraging transient and group corporate travel in top transient cities by extending a preferred transient rate to smaller meetings. Companies also can negotiate "meeting packages" in preferred transient hotels, and should track which bids were not accepted by hotels and why. Packages for small events can yield savings of 5 percent to 7 percent, he said.
Vikki Siemen, global account director for Starwood Hotels & Resorts Worldwide, said the chain has different criteria for meetings business than for transient business. However, shared criteria include an established booking window, a commitment to volume, shared risk and a demonstrated ability to move market share in both segments, she said. Hotels need assurances that a company has senior-level support for meeting and travel consolidation, and solid data to minimize risk, she added.
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NBTA, which this year increased the number of meetings-related educational sessions at the convention, offered a two-part series at the conference on building a strategically managed meetings program as travel managers reported they increasingly are asked to source meetings and events. According to a late 2004 membership survey, 80 percent of respondents said their companies were working on defining and implementing a meeting policy and 60 percent said they were working on measuring cost savings through meetings management strategies.
One of the most difficult challenges in setting up a meetings management program is allocating staff resources for the program, said Deb Scholar, meeting and event services director for PricewaterhouseCoopers. Since meetings vary in complexity, statistics are needed to determine how many staff hours are needed for sourcing an event, she said.
"If you don't have data to justify staffing, you won't have staffing," Scholar warned. Companies need to determine their core competencies, define roles, responsibilities and the reporting structure and create deliberate opportunities for knowledge sharing, she added. PwC has a numbering system to indicate the level of complexity of a meeting.
Scholar said PwC determined 94,000 resource hours were needed annually to plan and source meetings. Based on statistics, PwC decided to handle 88,000 resource hours internally and the meetings department was assigned 42 full-time staffers and 10 consultants, she said. Remaining resource hours were outsourced.
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Sabre Holdings' GetThere subsidiary plans to fully combine the database of its meetings technology product DirectMeetings with that of its DirectCorporate product by second quarter of 2006, according to product manager Jeremy Stubbs. The entire database will be in global distribution systems, which will make DirectMeetings "truly open," Stubbs said.
The enhancement will expand data reporting and visibility through the system and erase any disconnect between the transient vendor database and the meetings vendor database, he said.