Corporate travel consultants increasingly are offering their buyer clients bid lists using geocoded data (geographic coordinates) to make the request for proposals process more effective and efficient.
Previously, the hotel solicitation process mostly involved the use of a corporation's recycled hotel property list or the use of airport codes and zip codes to refine a hotel bid list. However, as highlighted in the September issue of Procurement.travelby Scott Gillespie, founder of Travel Analytics, a new property "clustering" approachgroups hotels by geocodes to more effectively target the appropriate properties for a program.
"This strategy also enables buyers to quickly prepare relevant bid lists by automatically weeding out hundreds or thousands of hotels that have room nights but are not relevant to any cluster ... making rate negotiations faster and more credible," according to Gillespie. "Grouping nearby hotels into clusters opens the door to much more meaningful analysis of any corporate hotel program. This analysis arms the buyer with fact-based insights, quickly quantifiable savings options and instantly creates relevant competitive markets for bidding and negotiating."
BCD Travel consulting arm Advito in 2007 developed its own technology to aggregate geocodes from its database and create bid lists for clients. The tool collects data from hotel properties that are most relevant to a client's business purposes and filters the data by market tiers, rates and amenities. "You can use the functionality during negotiations to evaluate the various competitive offers by user-defined geographic areas anywhere on the map, from a couple-block radius to a citywide search," said Bob Brindley, Advito vice president.
American Express Business Travel Global Advisory Services provides similar data to its clients. Amex consultants categorize the hotels first by geocoding, then by market tier and later by amenities and value adds before a list is given to clients. Increasingly, clients are more concerned with the total price of staying at a hotel property as budgets are more constrained, and geocoding is the first step to completing this process, according to Christa Manning, director of the new eXpert insights research practice within Global Advisory Services.
"Geocoding is a data categorization method that really helps to get much more precise market tier [information] and neighborhood insight into hotel properties," said Manning this week during an interview at The Beat Live. "As the unbundling of amenities and services increases, geocoding is very important because it helps companies identify where is the most cost-effective place to stay--because the differences between [certain areas] can be substantial."
Amex's process aggregates data from databases including hotels that participate in global distribution systems and those that do not, as long as the geocoding is available. Oftentimes, in order for a non-GDS hotel to be in the database, it would have been used in the past by any of Amex's clients and then stored.
For the 2010 negotiation season, Advito relaunched its tool with updated geocodes, as many hotels sometimes used inaccurate data. The tool also now includes total pricing reports, offering clients estimated costs for amenities and value-adds, Brindley said.
Inundated By Data?
Advito and Amex are unsure of whether offering up the data itself--as opposed to only recommendations based on the data--would prove overwhelming to clients.
"We are dealing with an enormous number of hotels," Brindley said. In Advito's tool, clients are able to view screen shots and participate in the process, which is "one of the big values of the tool," but are unable to tap into the data themselves, he said.
Manning agreed: "What a lot of consultants bring to the table is the methodology and the data structures--that is actually the value of the consultancy," she said. "We potentially could sell that, but I don't think there is a big market for it."
Hotels Receptive To Clustering Concept
Some hotel sources said sharing this data to buyers would be useful for everyone involved in the bid process.
"If there are companies out there developing tools to help customers better pinpoint where the business is going to occur, that is a great thing," said David Townshend, Marriott International senior vice president of corporate and international sales. "We use geo-locating technology within our reservation systems and on Marriott.com because it helps the customer locate the most appropriate product to meet their needs."
Stephen Powell, InterContinental Hotels Group senior vice president of worldwide sales, said such data would be beneficial to hoteliers in another way: If hotel properties were more aware of which corporations to more aggressively solicit, they would have better guidance during the RFP process.