Guided by industry professionals including travel managers at Altria, Ingersoll-Rand and PricewaterhouseCoopers, Texas-based Hotel Sourcing Corporation is floating a new rating system that would allow hotels and corporate clients to size up one another ahead of the request for proposals process--potentially saving both time and money.
Formed in 2003 as a consulting company, Hotel Sourcing this year developed the Hotel Sourcing Alliance to help buyers and sellers "properly assess the potential value and risks" of working together. Hotels would pay $450 annually while corporations would be charged $750 for membership in a program that measures various data to produce a rank or score.
"Think of the hotel score the same way you think of your credit score," according to company information. "For corporations, it is the standard method to show their hotel program behavior in order to show credibility and further negotiate improved hotel rates. For hotels, it is the standard mechanism to assess the 'risk' behind a potential extended discount decision. The hotel score enables both the corporation and the hotel, as responsible partners of the alliance, to focus [on] the development of their relationship rather than on trying to figure out if the decision was justifiable or not."
The corporate scorecard factors in hotel program management acumen and geographical demand to indicate for hotels "what discounts will work better to capture, retain or increment your financial returns." Participating corporations would be able to identify opportunities to improve the performance of their lodging programs and identify the "perceived value generated by ... hotel suppliers in terms of the rate extended by the hotel."
According to Hotel Sourcing president and CEO Fernando Avila, the process takes in data on how well enforced and communicated a corporation's hotel policies are, and what booking processes it uses. "We'll validate that against a copy of the policy," he said. "We can't have a company increasing its score by saying hotel (choice) is mandated if it is not." Meanwhile, booking data is generated from travel management companies, with transaction counts from payment data also considered.
"It's only an indicator," Avila said. "This is not to be used for accounting purposes."
PricewaterhouseCoopers global travel manager Nicki Leeds said that although the rating system is still in development, "it's something I'll definitely present to my worldwide colleagues."
The information would show hotels whether buyers are "holding true to how many room nights they promised and showing how they scored on things like compliance," Leeds said. "Hopefully, it will lead to some standardization on how we measure preferred-hotel compliance, which is nice since it's been harder and harder to get rates. Then from the buyer perspective, it gives us a way to value what a hotel brings to the table (using an algorithm) and decide what key parts are important. It lays out a score ... not that it's something we couldn't do on our own, but it adds some validity and procurement process to why we choose the hotels we choose. Even though we already look at those criteria hotel by hotel, this will give an overall view. This would not replace the RFP process, but it's a report card for each hotel per market based on responses and then I know where to start negotiating."
Leeds said she remains a "strong supporter" of the National Business Travel Association's standard hotel RFP, although scorecards could "evolve into this being what you negotiate on, and then in the RFP process you're gathering other information about, for example, amenities."
Leeds met Avila through Omni Hotels corporate national sales director John Hackett, who also supports the Hotel Sourcing model. Avila said he is also in discussions with Hyatt and Hilton. In a prepared statement, Altria meeting planning and hotel program manager John Lowry called the Hotel Sourcing Alliance "a natural evolution of the hotel program management practice."
The support from travel managers and potential vendor participants is noteworthy, but this is not the first time Avila has tried to establish something new between buyers and sellers. Ten years ago, he established a company (later called BTLogic.com) to facilitate corporate negotiations on various travel services, mainly for midsize companies. Beta participants included British Airways, Kimpton Hotels and National Car Rental.
But "BTLogic didn't go anywhere and we sold it," Avila said.
Hotel Sourcing Corporation employs five full-time people, and Avila said he has access to "part-time resources to handle increased bandwidth."