Some corporate travel and meeting buyers—prompted by hoteliers charging higher room rates for meeting room blocks than transient bookings—are insisting that their negotiated transient rates be used for group stays. Many have found success.
Buyers are responding to a trend that began last summer and spread rapidly upon the conclusion of the negotiating season for 2003 transient hotel rates: Hotels increasingly have targeted corporate meetings as a source of revenue. That leads to a situation in which meeting rates often are higher than negotiated transient rates and, sometimes, the highest in the hotel, particularly given hotels' general inability to charge the same prices for ancillary meeting services, such as meeting room rental, as they have in years past
(Meetings Today, Jan. 20).Now, those buyers whose success negotiating transient rates partially caused this trend are attempting to apply the rates to room blocks. It appears hotels are finding it difficult to say no, particularly to the large corporate buyers that can comprise a significant base of business for an individual property.
"We are doing so, more so than we have," said Joe Preimesberger, vice president of corporate travel at Houston-based Science Applications International Corp. "We're noticing higher rates in the past six to nine months than for meetings we have negotiated in the past few years. Our transient rates have become lower, so there have been a lot of changes."
SAIC's Preimesberger, whose company ranked number 44 on last year's Corporate Travel 100 index, has found little resistance from hoteliers to negotiating in this fashion. "They're working with us," he said.
Some hoteliers said they are agreeing to the pricing setup on a case-by-case basis, heavily dependent on a company's volume and the needs of a specific meeting.
"People are trying to get the cost of meetings to a point where it will be consistent over a period of time," said Steve Richard, vice president of alliance account sales at Marriott International. "They are trying to peg transient rates to group bookings. It depends on the individual hotel. Sometimes, it is appropriate to apply that rate to group business, but it's difficult to achieve every time because of meeting space, audiovisual needs and seasonality issues. Plus, you are competing with other meeting buyers who may be willing to pay more. Offering global discounts without regard to meeting requirements does not pencil in as an advantage for us."
"There are large transient and group volume companies that have the ability to get a flat transient and group rate at a property," said Fred Shea, vice president of sales operations at Hyatt Hotels Corp., "but if you don't do a lot of business at a hotel, it may not make sense for us. We're not necessarily opposed, depending on the situation at a given property, but we're not going into it willy-nilly either."
San Diego-based technology firm Titan Corp. almost always books its meetings within the confines of its preferred hotel vendor program, said director of travel services Leigh Kramer. "It depends on the criteria for the meeting, but we will usually use the transient rate with extra negotiated for food and beverage or meeting space," she said. "Typically, especially in San Diego, the rate that we have is the best that the hotel will offer anyway."
Defense contractor Raytheon Co., ranked 12th on last year's CT100 index, recently has pursued negotiated transient rates for group and meeting bookings and has been successful "nine out of 10 times," said corporate travel manager Greg Herrera. Yet, he pointed out, Raytheon is a large company that has not eliminated travel and can offer preferred properties a significant base of transient and meeting business with little regard to seasonality. As such, Raytheon is able to make those deals with hotels, but Herrera will not seek the Raytheon rate for meeting attendees that are not company employees, he said.
"We do a lot of meetings in particular areas and they involve suppliers or customers," Herrera said. "We'll negotiate an associate rate for them that includes all the amenities that have been negotiated for the meeting. That rate is better than an agency rate or the public rate, but it's not the Raytheon rate."
Raytheon, which operates a largely decentralized meetings program but now is beginning to take steps to account for its meeting volume, has taken a step further in the five cities in which it does the most business, Herrera said, negotiating all-inclusive, per-attendee, per-day styles of pricing, a pricing method that is common to conference centers. Those prices, Herrera said, are based on the Raytheon corporate rate and adding food and beverage, audiovisual services and any other meeting needs. "So far, the feedback is positive," he said.
Marriott's Richard also said some buyers were exploring the use of CMP-style pricing. "We have done it at a number of locations," he said. "It's not terribly difficult to do, but it is terribly difficult to do at hundreds of locations. It has to be narrowed to the top locations."