Starwood Offers Rebates, Rewards, Discounts, Attrition Allowances: Chain Makes Multi-Yr. Bid

Starwood Hotels and Resorts Worldwide last month launched a program to secure multi-year, multi-meeting corporate contracts that features rebates, short- and long-term attrition allowances, service discounts and points for the company's frequent-guest rewards program. The program applies to contracts that include two or more events with 700 peak room nights at any of the 17 participating Starwood convention properties. The chain aims to secure long-term relationships with group business customers as the hotel industry rebounds, according to company executives.

"We would like to book customers for multiple years so that we can move them around from one Starwood property to another, and we have put together a menu of items that we would be willing to negotiate with the organization in order to try to bring them into a long-term commitment," said Scott Hermes, Starwood's senior vice president of sales and field marketing for North America. The 17 participating properties are in 13 different cities and two additional properties are expected to join the collection this year, he said. Starwood already has begun to negotiate contracts under the new offer, including one with a large association that Hermes declined to identify.

Starwood's move toward long-term contracts was the latest initiative by a hotel chain to capitalize on trends in the meetings management industry of consolidation and procurement-based pressure for cost savings. Group business is a solid source of income "in both an up market and a down market," Starwood's Hermes said, and multi-meeting contracts also can benefit buyers in the new business environment.

"If the meeting professional can go to procurement and say, 'we have an opportunity to lock up a three-year deal and we've negotiated some pretty favorable terms,' then that could potentially enhance the value of the meeting professional in the eyes of the procurement department," Hermes said.

Hyatt Hotels Corp. launched a similar offer in the fourth quarter of 2003 for 16 of its convention hotel properties.

"I don't know of a hotel company that's not doing this in the full service category," said Jack Horne, assistant vice president of national sales for Hyatt. However, Hyatt is reconsidering how it offers multi-meeting deals from the original road-show deals launched last year. Horne said sales executives of the 16 participating Hyatt properties plan to meet today to discuss new methods that would help to secure multi-meeting contracts.

"We actually had some very good results last year with the multi-year offer from these 16 hotels," Horne said. Corporations may not be able to book annual meetings years in advance, he said, but Hyatt has seen strong interest from corporations in booking several different types of meetings within the same year.

Jennifer Campbell, meeting and conference services director for accounting and consulting firm BDO Dunwoody LLP, based in Toronto, said she is interested in booking multi-meeting contracts, but does not often book her annual meetings for more than one year at a time. Any offer for multi-meeting contracts has to be flexible, she said.

"It depends on what properties they have that I'm using," Campbell said. "If it's two years for two different properties, that's fine. It's just that some years one program may not go to the same city." BDO Dunwoody's largest annual event involves 350 attendees for three to four nights, she said.

Hermes said Starwood made flexibility a top priority in the convention collection offer after conducting focus groups with meetings buyers of associations and corporations that might use the service. As a result, specific rebates and allowances are left in broad terms for individual negotiation.

"Often what you end up doing when you have a set package is redesigning it anyway, so the idea of this is to customize the offer," Hermes said. "The idea that we're trying to promote here is not unique. What we're attempting to do differently is how we execute it."

Arlene Sheff, senior meeting and event planner for The Boeing Co., said she wouldn't change any plans to take advantage of the multi-meeting discounts from Starwood, but if the timing of the offer was right, she would consider bundling her annual 950-attendee meeting with other events outside her department. Boeing runs a decentralized meetings management program.

"I just have to hear about it at the right time I'm looking for a space," Sheff said. "If I knew that I had a meeting coming up and I could get a better deal because I knew somebody else could buy into it, then I'd send out a notice to all the other meeting planners and say we should do this together."

Although the Starwood convention collection offer is focused on larger meetings, there is a strong possibility that smaller meetings may be included at some point, Hermes said.

"There is a far greater number of meetings that are of the smaller variety then the larger, so it's entirely possible that we could be moving in that direction. We just wanted to take it one step at a time," Hermes said.

Starwood expects to roll out at the end of the first quarter the second phase of its meeting service standard program, Hermes said. The program guarantees consistent high-level service for meetings at the more than 80 participating properties. "It was important that we get the consistency of how we deliver meetings down before we went out to do the new program," he said. "If you can have consistent service delivery on the long-term relationship, then all the synergies can build."