Building on ideas that germinated among government travel pros three years ago, 15 Western U.S. states have banded together to implement a nationwide online database of rate information on more than 4,000 hotels that agreed to honor federal per diems for state employees.
The Western States Contracting Alliance, a subset of the State Travel Managers Alliance, last February invited hotels to participate in their collective buying effort, offering access to the group's total spend in exchange for making available to state employees the per diem rates, according to Tim Hay, lead state procurement analyst for Oregon. The group was not successful in launching a contract across the alliance, but instead issued a "qualification agreement" with each property.
Through such deals, each property agreed to offer state employees a rate at or below the General Services Administration federal per diem lodging rates, with additional amenities provided at the discretion of the property.
National representatives from such hotel companies as Accor Hotels, Best Western International, Carlson Hotels, Choice Hotels International, Extended Stay Hotel Group, InterContinental Hotels Group and Red Roof Inns delivered the qualification agreements to individual properties. La Quinta Inns & Suites is expected to join in 2011, Hay noted.
Program Uses Consolidated Database To Check Rates
The alliance listed qualified properties in a Web-accessible database that breaks out such amenities as last-room availability, free Internet, no blackout dates, environmentally friendly initiatives and others.
"We did allow for some flexibility," said Hay. "If a property wanted to offer no blackout dates or last-room availability, they get a little star and a green icon in the database so it shows they are preferred."
The state of Oregon used internal resources to build the database, according to Hay. "I knew what I wanted the database to look like, and then I went to my internal department of administrative services and [an employee] over there actually built the database," he said. "It looks and feels like a hotel search engine."
The system does not book hotel stays, but travelers can contact their travel agency or click links created by each property's parent company and book directly. "The link or code will automatically pull up the GSA rate for that location," Hay said.
The alliance initially hoped to create contracts with hotels for the whole group, but that goal quickly proved unattainable. "We started working on these agreements about a year ago," Hay explained. "We stopped it back in June because we realized the initial path we were on was the wrong path. We were trying to bind an entire chain to a program, and then we didn't realize how franchised the lodging industry was."
Marriott International, IHG and Choice "will not sign a master agreement that binds all of their properties," Hay added. "That is why we quickly changed course and went to a qualifying program instead of doing the formal request for proposal binding the entire chain."
"There is one qualifying list. One of the challenges we face is that even though we are all a part of the Western States Contracting Alliance, we are still each individual entities--15 different states," said Hay. "You would have to do a separate contract for each state for each [hotel]. That would be impossible."
The alliance's goal is to eventually allow for bookings through the database, but until it proves a success, Hay said the states cannot make such a "significant investment."
Total travel spending for all 50 states is slightly above $2.3 billion, and all state employees have access to the lodging database.
Sourcing Other Pieces Of The Travel Program
Although the alliance has existed since the mid-1990s, it did not venture into collective travel buying until 2009. The states "always are looking for joint contracting opportunities. They had never gotten into travel before; it was always buying computers or buying tangible items," said Hay.
The group's first travel-related contract was for car rental. The alliance in October 2009 reached agreements with Enterprise, National and Hertz, negotiating a flat rate for a standard car of $31 per day, which includes a full liability waiver and insurance. Now, 16 states participate in the car rental master agreements, currently scheduled to run through October 2012. The group is able to contract master agreements with suppliers because all its members are permitted to sign contracts on behalf of the state, according to Hay.
In 2006, the alliance also introduced a standardized RFP for soliciting citypair airfaresand lodging, according to Hay, who said that "one of the complaints of the airline industry was that all the states would do their RFP differently."