The numbers of corporate buyers who are combining group and meeting volume in their requests for 2004 transient hotel rates is growing, and a handful of buyers have taken the concept further still by requesting a single room rate for all transient and meeting bookings. Though anathema in theory to hotels, some have agreed to meet that request.
The move is extremely rare and can be executed only by buyers who not only have accurate and deep data about their meetings programs, but can demonstrate an ability to mandate, or at least heavily influence, the selection of the meeting site. This pool of buyers remains exceptionally shallow.
"We have started to hear this," said Ty Helms, vice president of sales for Hyatt Hotels Corp. "We haven't really gotten into it yet, but that is our preliminary take."
Unlike prior years, it appears that hoteliers will not dismiss such buyer attempts out of hand, Helms said. "It depends on the situation, but we have to listen to everyone and see what we can do," he said. "We have to weigh our options."
One buyer who already has achieved success with this maneuver is Kari Knoll Kesler, Minneapolis-based sourcing specialist for travel, meetings and promotions for European financial services firm ING.
During an August roundtable discussion of buyers hosted by BTN
(BTN, Sept. 8), Kesler described the move: "From a hotel perspective, we planted the seed last year by asking in the user-defined questions in the RFP, 'Will you extend that rate to groups and meetings?' When I was on the hotel side, we would never have been allowed to give our transient rate carte blanche for a year for meetings. Yet, every single hotel I asked last year said yes," she said.
Kesler added that she would extend the philosophy this year. "We are specifically bidding for the right hotels in only the right locations, where we know we can channel volume," she said. "We need a transient bid from you and a package with a transient and meeting bid. I'm not mandating that the rate be exactly the same, but I'd like to let them sell me on why it can be different."
There appears to be a few motivating forces behind the embryonic trend: Hotels remain in a buyer's market, particularly for business transient travel, and are not in a position to reject significant business—especially accounts in which their property or chain can be guaranteed a specific share of transient and meetings bookings—out of hand. Also, in many hotels, corporate meeting room rates remain higher than average transient or leisure rates
(Meetings Today, Jan. 20). Finally, those corporations who have implemented extensive meetings management and consolidation programs often have at least a partial sense of meeting site selection patterns within their companies, offering a negotiating tool.
Yet, there are still many more companies that are struggling to discover true meeting expenditure data than those that have a true, full picture of it. Without that picture, hotels will see little reason to entertain expanded transient and group deals, preferring instead to negotiate meetings individually.
"Most people who deal in meetings understand why they're different than transient," said David Oglivie of Starwood Hotels & Resorts. "It all depends on seasonality. You may see it for small meetings; there may be some people willing to do that."
Some RFP and hotel consultants acknowledged that some buyers are considering this move, but cautioned that few can expect success.
"We do have a few clients who are asking meeting questions in the module, and there are a lot of people looking to envelop them into the full program," said Jo Ann Baynes, co-founder of Reston, Va.-based Uversa International, which processes requests for proposals for more than 50 corporate programs and hotels. "But most of them do not have a full handle on meetings."
That, Baynes said, is the key roadblock for any buyer who seeks to influence transient hotel rates or receive a combined rate: Hotels likely will demand proof of the buyer's ability to track meeting expenditures and control site selection in return, powers many meeting and travel buyers do not possess.
"Hotels aren't really open to this," Baynes said. "They want some guarantee that they can get those meetings, either a specific share or number, for them to give out a lower transient rate. I don't think too many buyers have consolidated their programs and are able to direct meetings. Some do have a handle on it, but most really don't. The trend is going that way, but it's really just getting started."
Hotels and some buyers prefer to negotiate meetings individually, as seasonality and demand at a given moment heavily influence the rates properties are able to charge. Flexibility on a buyer's part can reduce those rates, particularly if event dates can be changed.
"It's a great idea and it could have a great impact on both sides, as hotels could get a better mix of business and customers could get a better rate," said Alison Guilbeaux, director of business development and hotel consulting services for WorldTravel BTI. "But there are a lot of basics that need to be done by the buyers first. Hotels are not structured to price meetings in that way because corporations can't yet identify what they're spending on meetings. Generally speaking, it's difficult enough to get good transient data."
Yet, there are buyers who have been able to document and control meeting expenditures and have used that data to influence transient rates without insisting upon a single rate for both sides.
"We tend to frequent specific chains with our meetings and our transient partners use that," said Tom Smith, director of meetings and events for Woodland Hills, Calif.-based firm Health Net. The healthcare company's meetings program is fully centralized, though separate from the travel operations. "We do a lot at one chain on both sides, and it influences the rates of both," he said, adding that the company still negotiates meetings individually.