Christie Hicks
The Transnational last month spoke with Christie Hicks, senior vice president of global sales for Starwood Hotels & Resorts Worldwide. Hicks discussed negotiated rates--saying they "are definitely going to go up"--as well as corporate hotel programs, rate loading and Starwood's growth. An excerpt follows.
Are travel managers seeking to expand their hotel programs?
There are not a lot of new surprises. All of your major cities--basically any of your top 20 to 25 cities, like Chicago, New York, Dallas, San Francisco and those kinds of major markets--are still on everyone's radar screen. That is where corporate travel takes place. However, places like India, China and Russia are much more prominent than they have been before, and they will continue to increase in prominence because many of these multinational companies are really going global in how they go to market. It has taken time for travel to catch up to what goes on in these major corporations. Customers for the first time are trying to leverage their domestic business with their international business and vice versa, and that makes it really interesting and fun to negotiate. It really helps us because with so much of our supply outside the United States or North America, we have an opportunity to make a difference in multiple divisions. It absolutely helps with the downturn, and it makes a big difference because when you look at the international growth overall, it gives us an opportunity to balance.
What else is different this year in regard to negotiations?
We are just getting started. There are only a handful of requests for proposals that are out right now. For me, [the National Business Travel Association conference in Los Angeles in July] was actually a pleasant surprise because it reinforced that the work that has been done over the past several years developing legitimate partnerships with our biggest and best customers actually does pay off. It felt like we were working from a place of cooperation as opposed to a place where we were trying to take advantage of each other. That often fluctuates depending on who is in the driver's seat. This year we are in a place of partnership, where both people are driving at the same time. It is likely that there will be locations that experience the kind of growth that they have seen in the past because there are many strong markets, but it is equally as likely that there will not be growth to that extent. All hotel companies have to be smart and customers have to understand where they can push their business and with who they prefer and really prefer them. If you are able to shift share, that is where it pays off on the client side of things, and that is good for the hotel company because we end up really being able to move the business into our hotels versus our competitors. You have a choice: You can make it up in volume or you can make it up in rate, and if you can make it up with both pieces, it ends up being better for everyone.
Are more travel managers seeking rate loading stipulations in their contracts?
We have heard that and have seen it in a couple of cases, but for the most part it has become the entry part of doing business. Customers have made it very clear to us that operational excellence is something they expect. Rate loading falls into that category. When we contract with a company, it is our obligation to ensure that we have the rates loaded correctly and that, if and when we are audited, we pass that audit with flying colors. We have put a lot of effort into this over the last several years because we know how important it is to the client. When you talk to some clients, they are very strict about this: If you don't pass your audit, you have a certain amount of days to cure; if you don't cure, then that's it. It is our responsibility to make sure that when we enter into an agreement or into a contract, we fulfill our operational side of that obligation and load those rates appropriately. We put our resources in, we've tried very hard to make sure we do it correctly and we take it very seriously. It is not talked about as much; it is just expected.
Some travel buyers have complained that many of the RFPs they send out go unanswered. What is the best practice for hotels to follow in terms of responding to RFPs?
If you are running 100 percent [occupancy], then that probably gives you the right not to respond, but I don't think anyone is. A best practice from a customer service perspective is that you owe everyone, at minimum, some level of response. That doesn't mean that everyone should go through a full-blown RFP, because if their business is based on different criteria than a hotel company happens to need or how they do business, it might make sense to find an alternative rather than just responding in a standard way through the NBTA [standard hotel RFP] or Lanyon or another third-party provider. The best way to determine what the next step should be is to increase your knowledge about that account and, if it happens to be a new account, have a conversation about where the real business opportunity lies. From my perspective, if a client wants to do business with a small number of hotels, we need to facilitate allowing them to negotiate with those hotels directly. That probably means that they don't need to go through a major corporate RFP. We have to be smart about that because client resources, as well as Starwood resources, are limited, so you want to utilize your rate where the return is there. But there is a service-level answer for every customer who wants to do business with you. We have to find out what that is and make sure that we provide it
Is there much concern that the increase in supply will have detrimental effects for Starwood?
No, because there isn't a ton of supply going into the market. This is a very different time than the last economic change. The growth that is being experienced by Starwood and some of our competitors is more globally driven; it is where the travel growth is happening. If you look at the supply and demand ratio as compared with other economic swings, there is actually less supply opening now than in the previous downturn. That bodes very well for the length of time that this might be occurring, and it also helps all of us to feel a little bit more comfortable and more confident that we can fill the hotels that are opening. There is not going to be a glut of new properties. Everything that we read and talk about and that we participate in gives us good confidence that we are looking at a very different level of increase of supply than in 2001.