Starwood Deals Fuse Trans., Mtgs.

Starwood Hotels & Resorts Worldwide very recently began signing standardized contracts that include combined corporate group and transient rates and terms in locations where both volumes are high. The chain has limited the contracts to its largest corporate clients, provided they have strict policies and demonstrated abilities to govern meeting attendee and transient traveler behavior.

The contracts focus on cities and properties that Starwood clients frequently use for group and transient travel. The contracts include standard room rates for all events held at those locations—though those rates may not be identical for transient and meeting bookings—and other marketing considerations, said Starwood senior vice president of global sales and development Marietta Baldwin.

"We are looking at strategic account management much more so than we have," said Baldwin, who characterized the extent of this program as "very limited." The specific terms of the contracts vary by client, she said.

"We look at key locations for transient and group and where they cross," Baldwin said. "We'll work with the company to see what they want to do and whether they want a consolidated type of deal. It may not be the same rate, but the whole value is taken into account. We're going about this in a very specific way."

Before signing such deals, though, Starwood demands proof that its clients can control meeting site selection and traveler hotel choice. "We will look at who signs the meeting contracts and whether the corporation has the necessary internal structures," Baldwin said.

The impetus for Starwood's decision is to become the most, or only, preferred hotel chain in locations where its large clients operate, consequently allowing the chain to capture a larger potion of marketshare at a time when some corporations' meeting activity is escalating. Also, Baldwin said, signing these types of contracts is one method of taking advantage of organizational trends within Corporate America. "We are seeing, for the first time in several years, corporate group and transient operations coming together more. They've been very separate," Baldwin said. "There are finance and procurement executives who see that structure and want to know why they are not working together."

InterContinental Hotels Group also will negotiate combined meetings and transient deals, according to vice president of global sales Mike Fegley, but IHG may hold less interest in doing so in the future. "If there's a particular area or hotel where a corporation does significant business, we can cut a deal in contract form," he said. "There can be one or two levels of pricing. There still will be creative buying and selling, but we will see less of this as things pick up. 2005 is a bullish year for the industry."

Fegley said IHG needs proof of the stability of the corporations' travel and meetings volume before signing such a deal. "We do our homework and want to know the customer can really drive share," he said. "We want to know the volume will not change that much."

San Diego-based Science Applications International Corp. currently has no hotel deals that cover both transient and meetings, but vice president and director of corporate travel Joe Preimesberger said such language will be part of the company's 2005 requests for proposals. "Hotels generally want to deal with it separately, but we will try to do it at individual properties in San Diego and Washington, D.C.," he said. "We're looking for one rate for transient and group. We'll see what happens."

Though SAIC's corporate travel and meetings and conference planning departments are separate and housed in different divisions, Preimesberger said, the two work closely, enabling them to approach hotels together.

Many corporations, even those with very large hotel volumes, do not have the requisite ability to drive meeting site selection to negotiate such a contract. "We've talked to our hotel partners about transient and meeting contracts, but we are not so tightly wound for a hotel chain to be receptive to that," said Chris Staal, vice president of global sourcing strategies for Thomson Corp. of Stamford, Conn. "We absolutely have received levels of meeting service and pricing because of the transient relationship, but it's within the spirit of the relationship with the hotels and not a formal approach."

Staal said Thomson recently stepped up its internal communication, pushing meeting planners and department heads to align their meeting site selection strategies in accordance with Thomson's approved hotel and airline vendor list. He said the company during the past three months has worked deals with hotel chains that authorize one point of contact on the chain level for all meetings, regardless of where they are held, the location of the planner or whether the request is submitted by a Thomson planner or an agent from American Express, Thomson's consolidated domestic travel management company. "Hotels tend not to organize that way; they usually organize geographically," Staal said. "Transient, though, is a different area of specialization and expertise."