Business Travel News in November discussed hotel negotiating strategy with four travel buyers: Pfizer director of global travel Phil Dunphy; Cynthia Gillen, director of procurement and travel management for BDO Seidman; National Business Travel Association president Kevin Maguire; and Cynthia Shumate, director of travel services for Estee Lauder Cos. In addition to 2007 negotiations (BTN, Nov. 19), participants discussed ongoing corporate hotel trends.BTN: How will room nights in your hotel program in 2008 compare with 2007?
Cynthia Gillen: We do expect to have more room nights coming through. Our average stay has been creeping up very slowly, and we are targeting to bring more of that volume to our consolidated travel management company. We found that there's an average 13 percent savings on non-negotiated hotels booked individually versus through a travel management company.
Cynthia Shumate: It's hard to tell. I anticipate more international room nights, which is a whole different conversation when it comes to negotiating. The major chains are aligning more so than in past years, understanding that the growth is coming from U.S. travelers. It makes it easier for travelers to not think about where they're staying and lifestyle changes. An issue with international hotels is still the fact that, depending on where you go, there are a lot of hotels that aren't on the global distribution systems. It's a more labor-intensive booking scenario. We still see a historic behavior pattern where travelers will call the affiliate office. Our effort going forward will be to make sure those rates are loaded, that we have the information from our affiliate offices and that as long as we load them in, we hope that the rates are the same on both sides of the pond.
Kevin Maguire: With the negotiating consortium
(BTN, Aug. 15, 2005), at the individual companies you'll see either it stay flat or a moderate increase. The consortium as a whole will increase. Projected increases have backed down a little bit because technology has finally got to a stage where you can do teleconferencing and Webcasts, and it makes sense.
Phil Dunphy: Barring any major development on Pfizer's restructuring, we're going to continue to shrink at this moment in time, and we're going to continue to shrink volume through 2011. But, you never know what might come into that position, a merger or such.
BTN: Is last room availability difficult to negotiate now?
Dunphy: It's not that hard to negotiate if you draw the line and say that that's how it is. With inventory control and yield-management systems, much like with the airlines, you can get the lowest price of the day, but there's a lot of inventory games being played, and those can be adjusted on a second's notice.
BTN: Are hotels tightening the definition of a standard room?
Shumate: It's tough, because there's not an industry standard for that definition. It takes a lot of time and effort to go back and re-audit these things. You sometimes wonder whether the 200 standard rooms out of the 300 in the hotel that you start out with negotiating at the beginning of the year are still available to rate at various times throughout the year.
Dunphy: It's like European business class. It's basically the same chair, but they just move the curtain.
Shumate: You have to have LRA, if it's part of the conversation for travelers, because this moving, bouncing ball is very difficult to explain. The owners are trying to yield manage, right? But there's no consistency. When my president's admin calls in and gets a rate one week, and two weeks later, she calls in and it's dramatically different, how do you explain it? Negotiating 10 percent or 20 percent off the best available rate still doesn't explain it, because the BAR is all over the place.
Gillen: One thing that we've actually brought up for discussion is to look at yield-management strategies that travelers understand. The airlines are a perfect example. They've got fences: three, seven, 14 and 21 days. How about if we structure an LRA that's going to be guaranteed as long as you have a room available in a hotel, that is going to be locked in and guaranteed before a certain day? Another approach is whether we can have LRA part of the year and work with dynamic pricing for the other part of the year.
BTN: You're not averse to dynamic pricing?
Gillen: It has its places, but it does not fit into a core target market, where predictability of cost and budgeting and consistency of being able to show the value of a product is important. When I look at our core destinations, LRA is what we're looking for.
Maguire: We need to look at new innovative ways to get pricing. It may be time that we try these methods. Change is painful, but I think it's time.
Gillen: We're open to all kinds of change, as long as we can communicate it in a consistent way. The real savings of a good hotel program doesn't just come from the rate and value adds. It comes from policy and compliance. You could have the best deal in the world, but if nobody is using it, it's not doing you any good.
Maguire: They thought dynamic pricing was that consistency, but nobody has any idea from one hotel to another what the definition of dynamic pricing is.
Dunphy: The industry itself hasn't made it clear. I try to instill, especially at the properties where we do a fairly large volume, to look at that as a strong revenue base. Everybody's got to have that basic monthly income to pay the bills, and that's the purpose we serve.
BTN: Are you including green policy questions in your request for proposals?
Gillen: We're using the EPA's Green Meetings Initiatives as a benchmark.
Shumate: One of our divisions, Aveda, had a pretty in-depth study on green travel and meetings. They had a survey of about 20 questions, and we narrowed that down to about the 10 that are the most definitive. We're using those to designate hotels with a light green and dark green assessment. Are they skimming the surface, or has this hotel really taken it seriously? For some of our divisions, this could be a substantial choice factor.
We're going to put it out as part of our preferred hotel directory. Until we really have measures on these things, they're somewhat subjective, but I think we can make that initial determination. It may affect our meetings more than our transient business.
Gillen: You also have to ask if they communicate it to the guests. Part of what I discussed with several hotels is that they may have green initiatives, but no one knows about them. They need to market this and get it out to travelers. The people who make decisions are our travelers, and we want to enable them to make wise decisions.
Dunphy: We didn't include any of the green questions. Not that we shouldn't be socially responsible, but I just think there's a lot of people trying to make a lot of money on this whole green initiative. They're making green from talking green, not being green. We're going through an evaluation now to see if we can understand what that footprint means for Pfizer, based on our travel program. You should be focused on what you can clearly do with vendors or within your own company to change that footprint. For me to report on what our total air program is, what's that mean? That plane is going to go anyway, whether there's a Pfizer person on it or not.