Tackling corporate hotel programs through the request-for-proposals process for many buyers seems like using a screwdriver to hammer a nail: It's not quite the right tool, but in the absence of anything better, it can get the job done.
The cumbersome, time-consuming process leaves Bill Keltner, manager of travel services in North America for chemical company BASF Corp., pining for a simpler time. He recalled the days when issuing massive RFPs for hotel programs was far from commonplace.
"The approach a lot of companies had, if you had a hotel with 500 room nights or more, the travel manager or someone delegated would conduct negotiations," he said. "Everything else was done with chains, going for whatever kinds of discounts you can get."
Although the endgame for many travel programs has changed little from that model, the journey there has become more complex. While only 28 percent of 123 travel buyer respondents surveyed in December 2013 by Travel Procurement indicated that their most recent hotel RFP process had taken longer than the previous year, perhaps that's because there's little room for growth in the duration.
IBM category manager Garth Jopling, speaking during The BTN Group's September conference in Toronto, said hotel RFPs have become almost a "permanent process."
"We start gathering the data and coordinating the global effort in April with the goal of getting the rates finalized in December and loaded by Jan. 1," he explained.
Couple that with the fact that hotel RFPs remain overwhelmingly an annual process. Almost nine out of 10 survey respondents said their base contract term for hotels is one year. In contrast, more than 70 percent of respondents for every other supplier category indicated base contract terms of two years or more.
A few buyers have reported success with multiyear hotel deals, but the fluidity of hotel rates makes such arrangements difficult to forecast and manage—not that most hotels would be interested, anyway.
"Very few companies go this path, and they usually don't go because it's not a success-proven strategy," Carlson Wagonlit Travel hotel solutions group director Yon Abad said. "Few hotels are willing to provide a two-year flat rate, and all the systems and processes around the RFP management are not set to manage two-year deals."
IBM's Jopling said he uses multiyear rates "in a few key markets, but it's very difficult to predict whether a given market will go up or down."
Instead, buyers try other approaches to simplify the process, Abad said. Some try upfront negotiations with hotels to eschew the RFP process altogether and agree upon a rate, he said.
Jodi Woods, strategic sourcing manager for outsource services and global procurement at medical technology supplier Becton, Dickinson and Co., said she kicks off the RFP process with a supplier conference call, during which she outlines her strategy and asks hotels to put their best rates forward in order to avoid multiple rounds of negotiations. It does not simplify the process with most hotels, however.
"We had a small percentage of hotels that we were able to accept in round one, a little more in round two, and in some key locations, we're still fighting with them," she said. "I don't understand why it has to become this game of cat and mouse."
Woods added that she sympathized with hotels, given the volume of RFPs they receive. Cindy Novak, director of global travel for construction and mining contractor Kiewit Corp., said for that reason she is considering shifting her RFP cycle off the traditional calendar, in the hope that she can command more attention when hotels are not deluged with requests.
Novak said the process for her is getting longer. Not only is her travel program getting larger, but also she increasingly needs to take more than just price factors into consideration. This includes safety and security issues as well as such social responsibility questions as a hotel's carbon footprint.
Hoteliers, too, report more probing questions on the latter subject. In recent years, the number of questions regarding environmental issues on the Global Business Travel Association's modular RFP has multiplied from six to 20, said Vanessa Doyle, consulting manager at American Express Business Travel. InterContinental Hotels Group vice president of corporate responsibility and global lead for sustainability Paul Snyder said he's seen interest intensify as a result.
"They're asking what's the occupied footprint on an occupied room in your hotel, and how has that changed over the last three years," Snyder said. "The questions are that detailed. We're finding we're being asked more questions, deeper and more meaningful questions, and we're told it's having an impact on the decisions made about people purchasing rooms."
IHG has eased that process by feeding its audited sustainability data into its systems and into the modular RFP, so such questions are answered automatically, Snyder said.
For those who use GBTA's modular RFP, staying on top of changes presents another challenge. Last year, for example, the association introduced a fifth season into rate offers as well as extra room types, which some hotel systems had a hard time managing, CWT's Abad said. Only about 2 percent of hotels ended up using that extra season, he said.
"Maybe we'll see the benefits in the future, but so far, it's been a barrier to keep improving the process," he said.
Amex's Doyle noted that the form last year also took out such rate distinctions as rack rates and consortia rates. Buyers who still wanted those distinctions had to put them back in as user-defined questions, she said.
Also, asking for data in RFPs and getting it are two different things.
"We have access now to so much data, but we need to be able to make sure we're using it," Kiewit's Novak said. "It adds an additional level of sophistication in our RFPs, and we need to recognize that not all properties are going to be willing or ready to be that specific in responding."
Hoteliers' interest in spending time answering cumbersome RFPs may be waning too. Lodging Advisors CEO Sean Hennessey, speaking at The BTN Group's Travel Management 2014 event in December, cautioned buyers that "hoteliers are starting to become less enamored with you all."
"Online travel distribution and the evolving emergence of technology is giving hoteliers more options to sell rooms than before," he continued. "Many hotels in New York and Houston [that are] focused on corporate business are using the [online travel agencies]. They may not get as great rates, but if they don't have to put as much effort into marketing the rooms, it can make the hotel as profitable as it would be otherwise."
Considering the complexity of the process, it's not surprising that the hotel category is the most likely travel RFP process for which a travel buyer will seek outside help. Nearly half of the respondents in the Travel Procurement survey said they use third parties including travel management companies, consultants or technology providers during the hotel RFP process. Airlines were the second-likeliest category for buyers to use third parties, with 37 percent of respondents indicating they did so.
BD's Woods said she uses American Express' advisory services for much of the tactical work around her hotel RFPs. "Even just having to review the results can be overwhelming," she said. "It's an enormous spreadsheet with all that data, but it's very key in making a decision."
Kiewit's Novak also uses her agency for hotel RFP assistance, noting her program is particularly complex as she is managing three tiers of travelers: executives, middle management and construction and craft teams. Those tiers each have different needs for hotels and amenities, she said. Fitness centers, for example, are a core need for the executive teams but not a big concern to the construction teams, who tend to be more interested in evening meals or receptions.
Although the most recent RFP season was Novak's first with a new tool, "just knowing that the professionals are handling it, using their historical information and intuitive knowledge of the whole industry, provided a good sense of confidence for me," she said.
Using a third party for hotel RFPs, however, does not mean yielding strategy entirely, BASF's Keltner said. While he also uses consulting services—and marveled at how large companies that manage their hotel RFPs totally in-house must have "unlimited resources"—he also directs them on his goals for the program.
Some third parties want buyers to cast a wider net with their RFPs, especially since they are paid based on volume, Keltner said. Conversely, his goal was to reduce the number of hotels in his directory, upping the minimum room nights required for negotiations, with the thought that lower-volume negotiations yielded mediocre discounts.
Similarly, buyers should be cautious with tools for data management, Keltner said. He compared a buyer's role to that of a pilot who occasionally looks outside the cockpit, not just at the instruments.
"You have to be constantly on top of whomever is handling the process for you and push back at them," Keltner said. "As companies globalize, we often shoot ourselves in the feet in the way we approach this thing; we are the ones forcing the overcomplication."
Additionally, Novak said it's important not to let the process overshadow the importance of developing relationships with key account managers.
"Because we have those three tiers, a brand might be responding to the executive level, but we would need to talk about the same brand at another location for another level, and it's hard to talk about that in an RFP," she said. "Even though we use electronic RFP tools to streamline the process, there's so much value in having a relationship, whether it's with a general manager of a property or an account manager, so they can be the liaison between us and the hotel and make sure we get the right fit."
Sidebar: Meetings E-RFPs Still Swamp Hotels
In May 2012, Travel Procurement noted the "e-RFP eruption" that inundated hoteliers with an overwhelming amount of electronic meetings business leads. That followed the development of technology that made it easy for buyers to ask more than 100 questions of a potential site in one request for proposal, and submit that request to dozens of properties at once. Since then, meetings e-RFPs only have increased—the number received by Marriott International in 2013 was 300 percent more than in 2010, officials said—and closure rates remain low, as hotels struggle to keep up.
"It just keeps getting worse," said Dave Lutz, managing director of Velvet Chainsaw Consulting and former president of the event planning and registration division of meetings-management third party Experient. "The only solution seems to be to throw people or technology at [the problem]—it's kind of sad."
Hyatt Hotels Corp. senior vice president of sales Jack Horne said in 2012 that only about 2 percent of all the RFPs submitted to Hyatt properties through electronic channels—including Hyatt.com and meetings technology companies like Cvent, SignUp4 and The Active Network's StarCite—converted to booked business. "The problems that existed before are still the same today," Horne said recently.
Despite the 2012 launch of Quick Book, an internal Hyatt tool that automatically responds to e-RFPs without human intervention by prepopulating answers on such meeting aspects as food and beverage and room rate, Hyatt's conversion rates haven't budged.
"The reason no progress has been made," Horne said, "is it's a significant investment on the part of the hotel community." Hyatt plans to announce a partnership in late 2014 that would help advance Quick Book, he said, and in the meantime the company has placed additional sales associates at various hotels "to handle all e-RFPs and contracting," freeing time for property salespeople.
Meetings technology companies are working to find ways to alleviate some of the stress for hoteliers. Last month, Active debuted MarketView 3.0, a platform that allows hotel users to "respond to e-RFPs in a single page, with far fewer clicks," according to StarCite. Users also can answer e-RFP questions with prepopulated "favorite" responses, cutting by two-thirds the time it takes a sales representative to address an RFP, explained Active vice president of strategic marketplace development Rick Binford.
Some hotel chains like Marriott have set up a centralized system that filters e-RFPs and delegates them to the right salespeople. "For meetings of 10 to 300 [people], we have centralized the lead process by markets for participating hotels through our group sales teams," said Nancy McHenry, vice president of sales office operations for Marriott. "This enables us to respond quickly to leads and offer solutions when the requested hotels are not available." Larger group opportunities are handled by individual hotels.
In addition to hiring more sales managers dedicated to responding to e-RFPs, Marriott also utilizes a booking tool called QuickGroup "for our customers booking events with up to 25 peak rooms or 50 attendees," explained McHenry.
By tracking e-RFPs within QuickGroup, Marriott found that 93 percent of its booked business comes from RFPs sent to no more than four hotels. "As a sales organization, we have been partnering with our customers to educate them on how response time can be negatively impacted when multiple hotels and/or cities are sourced and when lengthy addendums or customized questions are added to the RFP," said Doreen Burse, Marriott vice president of global sales for corporate accounts. "We have been working together to better qualify the specific needs of the group and identify the particular hotels that will best suit their needs."
If buyers want their meetings RFPs to stand out "as the cream of the crop," said Lutz, they will need to "show value by being someone that has a high success rate in look-to-book ratio."
Sending requests for information can help buyers narrow their options before sending RFPs. Doing so would allow hotels to disqualify certain leads, potentially like those that include at least 15 hotels, and pursue only promising business opportunities.
"Travel buyers should be as transparent as possible," advised Lutz. "Right now, there's not a high level of trust on either side." By giving hotels as much information as possible, buyers strengthen their chance of getting a timely response, he said.
"A site-selection company's or a meeting planner's goal should always be to have their RFP at the top of the pile," Lutz said. "That's what you should always want."
— Sarah Beauchamp
This report originally appeared in the February 2014 edition of Travel Procurement.