Roundtable: Buyers Sport Better Data, Tougher Policies For Hotel Talks

Dart Container Corp. travel department supervisor Cheryl Benjamin, Sapient global travel manager Michelle De Costa and Grant Thornton travel and meetings department director Cheryl Geib discussed hotel program strategies and negotiations with BTN editors David Meyer and Michael B. Baker at the Association of Corporate Travel Executives Global Education Conference in Chicago last month.

Business Travel News: What do you expect from negotiations this year?

Cheryl Geib: I feel pensiveness from the hotel industry. I have a feeling what we're going to get on first offer is not going to be the walk-away. They're going to try desperately this year to make up for last year. Construction loans are coming due. Last year they took huge hits, so they're looking to test the market this year. There could be as much as 15 percent leeway, depending on what market you're in. Hotels in second-tier cities are a little more afraid to risk having a good client walk away.

I'd like to maintain a program that's flat. Our budgets are flat. There will be more amenities on the table versus lowering the rate. I've done a little polling among our members to try to ascertain from a chain perspective what hotels are looking for as far as revenue per available room. I want to be a good partner and not worry tomorrow that my rate's going to be pulled, and I want my partners to show a profit, but I don't want—after the second part of the year when things haven't improved—the rates from August not to be optimal. Last year, in January, we did some benchmarking and had to go back to a couple of hotels.

BTN: What tier mix do you have?

Geib: It would be upscale. We have some limited-service, Hamptons and Courtyards, for our engagement properties, but our partners tend to be the Hyatts and Westins. Some of our largest usage is in a limited-service hotel, which surprised me this year. We've not seen that kind of activity before. They were trying to be good corporate citizens, I believe. We'll see probably a drop to more three-stars in the program this year because of that.

Michelle De Costa: For us, Europe is probably going to continue to increase. We had increases last year, even with better compliance and putting more room nights in the hotels. We had some that didn't even want to bid on our program, because our usage was lackluster. We had some slight increases, especially in London. I would hope to continue to see reductions because we are doing a great job in showing our partnership with hotels. We've had some areas where we've had to do some switching, because we had great negotiations and were able to lower rates and get better value-added amenities but then found we couldn't get rooms. In cities like New York, we have to expect increases, and in Boston and even Chicago, probably. It's a case-by-case basis, but overall, I'd expect next year our rates within our global program to be reduced because we're showing so much more buying power.

Cheryl Benjamin: Our production facilities are in small communities, so when we go in and negotiate a rate, we're putting some substantial business there. We stayed pretty flat last year, and I expect it to remain the same this year. We're not in downtown New York, Chicago or L.A. We're in the outlying areas even when we're near a large city. They're mostly limited-service.

De Costa: Our travelers are very cost-conscious. What has made us largely successful in the consulting space is that we do a lot of fixed-fee scenarios. That's part of the challenge of getting to use preferred hotels. We have more of the mid-level. In certain cities, we've been able to get really low rates at properties we would not otherwise have been able to enjoy, of the likes of a Four Seasons. I keep warning our people, don't love it too much.

BTN: Have any of you introduced dynamic pricing?

De Costa: We put it in place with one or two hotels. I don't have any metrics on whether it was successful. At the end of this year, I'll know our average rate at that hotel and whether I'd have done a better job with a fixed rate. Lanyon helped me through that process.

Benjamin: We have not.

Geib: I haven't even dipped my toe in that river. If I feel things I'm getting this year are not where they need to be, I might look at it. My concern is the feedback I'm going to get from the travelers. When they checked in one week, it was $139, and this week it was $169. Trying to explain dynamic pricing is like trying to explain yield management on airlines. It's one of the reasons I've shied away. No one's come up to me and said, "Cheryl, you should be doing this." No one has championed this.

BTN: What are your priorities in negotiating amenities?

De Costa: Internet's a big one for us. We also try to do restaurant discounts in some hotels. We've done some laundry in certain chains, where they have prices for people who are in a 30-day-stay type of scenario.

Benjamin: Most of our properties already include Internet service. We did just introduce a new property this year that did not have breakfast as one of their standard amenities, and we were able to negotiate a fixed rate.

Geib: Breakfast has a value only if it's used. Sometimes people grab a cup of coffee and go. When you're in the suburbs, you can assume the hotel's where they'll have breakfast. I haven't been able to make that assumption in the way our travelers travel. When you talk about shuttles and parking, we've negotiated them, but in some instances, I question whether throwing that in has hurt the rate overall. We're looking for the rock-bottom lowest rate we can get for the amount of volume we have.

BTN: Four-star properties generally don't include Internet access in rates. Have you been able to get them to do so?

Geib: The ones we have do. We've never really had a big issue with it. Our biggest challenge is people paying it when they check out. We constantly have to look at that. The rate's loaded, it's included, but at certain hotel levels, it ends up on invoices anyway.

BTN: Are any of you receiving electronic hotel folio data?

Geib: Not me.

De Costa: We have limited compliance through our card program. We'd like to see that change, but we have a really largely nonmandated culture. I've looked at third-party analytics that are fantastic, but they're also very expensive, and I don't know that the return on investment is there.

Benjamin: All hotels in our program are set up as a direct bill. Until the past two years, we've not had a large number of travelers on a card program. It's been a cash advance process, or you pay and get reimbursed. We're looking at moving from direct bill to billing a travel card, a purchasing card for all purposes, but I won't move until I start getting this folio data, because you get the credit card statement, and if you've booked for the entire division, you have the hotel and the date and nothing to pair it up with, and hotels can't provide it unless you give them a name. That's something we're working on right now.

BTN: What's the size and scope of your hotel program?

Geib: Our program is a medium-sized program, anywhere from $4 million to $6 million. The gap is because 60 percent of our hotel spend is billable to a client, so we have a lot of different types of hotel and overnight accommodations in our portfolio. We have 49 U.S. locations. Grant Thornton is an international firm, but I'm the director for the United States Canada has their own travel director, and the U.K. has their own. We're working on some globalization in the hotel program right now. I have about 37 to 39 hotels that we contract on an annual transient basis across the U.S. to support our local offices. We also have engagement agreements that can go anywhere from six weeks to three months to six months. I would say when you're looking at our total T&E, it's about $60 million, and of that, $12 million this past year was air. Hotel will run on a higher average to about 30 percent.

De Costa: Sapient is a very multilayered organization. Today, I manage a global program, so we have offices all over the world. We have 7,000 employees, and most of those employees are working on consulting projects. We have 72 hotels in our program right now. We also use a lot of client rates. Our spending for 2009 was $11 million in hotel and $12 million in corporate housing, and we treat those as two separate programs. We use the programs to complement one another. Sapient, before I came on board in 2008, had never done a formal hotel request for proposals. Doing the first RFP in 2008 when I came on board was really a challenge, trying to figure out where people stayed using expense data. There was no mandated card program.

Geib: I live in the same exact world.

De Costa: I did a small RFP in 2008, and as I started to do that, we also did an agency implementation because we weren't using a global agency before that. It was getting people to use the agency and getting the reporting. Even in 2009, of the $11 million, only $1 million of it was booked through the agency. In 2009, when I did the RFP, I focused on our offices, where we had offices, and our big projects.

We use Carlson Wagonlit Travel globally, and they have a really great program called Policy Messenger. We now have 100 percent compliance to our agency. Otherwise, you get short-reimbursed, so if you book air and don't have a hotel, you get an e-mail that hopefully prompts you to go back and book your hotel through the agency. Through education and the Policy Messenger e-mails, we have started to see better compliance to the hotel program. We had a small program in 2008, and it has really matured. We've also been able to do simple deals with at least one major chain, through which we get 10 percent off of the best available rate in cities where we wouldn't have received any discount.

BTN: What does "short-reimbursed" mean?

De Costa: All original air bookings have to be booked through Carlson Wagonlit Travel. When you file the expense report, it has to have the CWT invoice. We see original air bookings. After three occurrences of not submitting the CWT receipt, you are short-reimbursed 20 percent of the cost of that air ticket. It has been very effective.

Benjamin: Dart Container is headquartered in Mason, Mich. We provide packaging for food service industries. We have 20 locations throughout the U.S. and internationally as well. Our travel program is global, but it's not global. We've not tried to rein in a lot of that global spend because it's not enough to worry about at this point when there's other fish to fry. I've been with the company for almost nine years, and it was a pretty mature program when I came in. At any of our locations where we had production facilities, we had a property that was negotiated locally. We didn't have sophisticated reporting of any type. We got the advantage of the agency reporting, but it wasn't tailored to what we really needed. One of the first things I did was push for more detailed reporting so we could get our arms around what our spend actually was.

In my first year there, our hotel reported spend was under $200,000. Now, because we invoice everything and booking as much as possible—we're still not getting 100 percent of our hotel bookings, and that's never going to happen—we now invoice a little over $1 million. That's some group and mostly transient stays. We do not take into account our corporate housing. It's part of HR, which I report to, but it's handled separately. We have about 60 properties in our hotel program. We've had relationships in place with most of our properties for 10-plus years. Many times, they're from when the property opened, and we've developed some good relationships, which allows us to keep hotel rates really low.

We're a CTD now. We made the conversion back in 2006, so everything is now managed internally. We outsource nothing, which has given us that extra piece of reporting to be able to start tracking better.

BTN: Did becoming a CTD bring more in hotel commissions?

Benjamin: Our first year as a CTD, we saw easily a 20 to 30 percent increase. We didn't have that transparency before. We were tracking it. We were paying attention. One person staying in London four or five days in the grand scheme of a TMC might not be a lot, but we were following up on it a little bit more. Our hotel program has been pretty successful for our size. We've turned a program that was mature to begin with to a better operating one and have developed better relationships with our suppliers.

BTN: How do you fare in compliance?

De Costa: We just this year are doing the rate audit package through Lanyon. A lot of times, our travelers would know a hotel is our preferred hotel and book higher rates without knowing the negotiated rate. We have a very high online adoption rate.

Geib: Ours is high too, and that's been most of our success this year in increasing the success of the program. We have Cliqbook. The marketing pieces you can do now have really helped us with our online booking. It helps because they feel like they're getting enough information to be comfortable, and it sends the message to them immediately that this is something they have to do. Although we don't mandate the use of the properties, we found the soft marketing has been very successful. We have 75 to 80 percent adoption.

De Costa: That's really helpful, because a big part of the comparison in rates, they're not considering the parking, which is $20 to $30 a day, or Internet access or breakfast. They end up paying more for things that are included.

BTN: Does holding a CTD certification make it easier to move travelers to the proper channels?

Benjamin: It's just as hard. In some respects it's easier because our travelers feel we're looking out for them. They're our coworkers. I won't put our travelers any place I won't stay. If we get a lot of complaints, I'll go visit unannounced.

Geib: Within our communication framework, we have a social networking site for all our employees. I set up a couple different pages: a vacation travel page, where you can get some good hotel ideas, and also a hotel and air page up for feedback about their travel experiences. We have a dedicated e-mail box that's posted everywhere. We also put up an instant messenger box. I get comments: "This is awesome," or "They're not giving me my rate." If you give people an opportunity to complain, you've also opened up an opportunity for them to say "good job."

You can't be everywhere. If you have 50 hotels in the program, I've only seen maybe 20 in my 10 years, and I don't have the budget where I can go out and site inspect once a year. A hotel might change owners or flags or just not be any good anymore.

De Costa: I recently introduced some social networking in our program. It has been very successful. It's in its infancy, but I've been able to get people to try a new hotel in the city. It works well.

BTN: Have you introduced green hotel program standards?

Geib: We looked at ways that we could go green without too much complication. We didn't do a lot of carbon footprinting. Using the National Business Travel Association hotel RFP, we also added five or six custom questions and rated hotels on a scale of one to five based on how positive their responses were. It was simple. It wasn't rocket science. It was awareness. Our travelers enjoy it. It's something easy they can get their head around.

On our hotel guide, we have a list of what green components they have: recycling in the room, cleaning, training. There were some interesting responses from hotels. Some were extremely aggressive in what they were doing, and others hadn't even broached the subject. That was two years ago. This year, we'll expand our green questions and write them again. Only one hotel in our program did not have a 4 rating. This one property, unless they've upgraded some of their green initiatives this year, might not make the portfolio.

Benjamin: What questions did you ask?

Geib: The standard ones in the RFP are about energy conservation, water conservation, the training, staff training and cleaning. Most properties now are doing almost all of those. A couple years ago, not so much.

Benjamin: Where did you go further?

Geib: We went further in the training. We asked what that training entailed and how often is was provided. We went into the housekeeping pieces of lights on and lights off. Individual heating in the room is another one we're looking at, as is low-flow toilets.

BTN: Do you consolidate meeting and transient stays in your program?

De Costa: That's an area of opportunity for me. In our last request for proposals, we had a question about whether there was a Sapient meeting at your hotel through this year, and if yes, who was your contact? It's now up to me to try to rein that in. I'm gathering the information, but it's not something I'm leveraging as a part of my negotiation. It's a hole in the program.

Benjamin: We've tried desperately to pull in as much as we can. We've started doing some meeting planning internally within our department. We have negotiated successfully with all but one hotel to allow transient rates for any meetings.

Geib: We have been the travel and meeting department for nine years. We actively and aggressively leverage. When I started with Grant Thornton, most larger events were already coming into the portfolio. They were known. That was easy. The small meetings with admins in local offices, though, have been long and in some instances extremely successful. Where we have local offices that prefer what they do, we at least have contracts in. We have standard contracts in place with most chains. We're working on small meetings right now.