Publishing and information provider Reed Elsevier last year decided to better align hotel procurement across its four autonomous business units and corporate headquarters. Each business unit had its own profit and loss statement, policy, process and preferred vendors for small, medium and large meetings, transient spending and/or expositions business. Hotel spending across the businesses and segments totaled nearly $120 million.
It needed a hotel purchasing and strategic meetings management strategy, Madlyn Caliri, Reed Elsevier global procurement director, told the Association of Corporate Travel Executives in April. Under a newly hired global director, Reed sought global hotel management for transient, trade show and meetings, as well as development of a strategic meetings management program.
Hired in the spring of 2008, Caliri said, "The first thing I did was try to define the universe I would operate in. We had very spotty data." Using the data she could find, Caliri applied industry formulas to travel and entertainment and air volume to conservatively estimate total meeting spend at $37.5 million. While she found more than 215 small meetings, Caliri said the hotel spending on those meetings totaled just $7.5 million. More significant was the $18 million spent on 75 large meetings. Caliri also found about 28 policies in various languages, different online booking tools, about $40 million in hotel spending for the exhibition business and $42 million in transient hotel spending.
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Caliri said she looked for commonality or trends as she compared the business travel hotel portfolio to the list of facilities used for meetings. She delved into invoices, credit card and accounts payable data and talked to suppliers to "find out who's spending money and where. I found that 60 percent of hotel spend was at five chains."
Meeting with each of those chains, Caliri discussed the needs to better leverage spending. Unlike other companies that try to leverage the meeting function, Caliri said, "I wasn't managing the meeting planners, nor did I think that would be a good idea." Forcing all business units to use just a few preferred properties wouldn't work either due to the diversity of global hotel needs.
As planners in each business unit would continue to source and contract meetings, Caliri "wanted one primary point of contact," within a hotel chain. Data revealed that Reed Elsevier had spent the most at Marriott Hotels & Resorts, and discussions progressed faster and further as the hotel chain "wanted to grow share and so did we." The companies also talked about "developing business-to-business opportunities. I didn't find one chain that was in all the businesses that we're in, but Marriott came pretty close."
Reed became a Marriott Global Preferred Partner and was assigned a global account executive and support team to work with all business units for global travel, large and small meetings, relocation and local meeting needs.
Reed Elsevier expects the partnership to deliver "savings of $500,000 this year," Caliri said. "Historically, we had multiple people on our side, going to multiple people on the Marriott side." As part of the process, Reed Elsevier has streamlined the contacts at Marriott, which will service all the company's business unit managers.
The new strategy also includes a new companywide policy to support the initiative. A contract addendum and checklist were distributed to administrative assistants. If the admins gain hotel acceptance of the addendum and use the corporate meeting card for payment, they are free to contract meetings. If not, the are instructed to contact global procurement to source the venue.
"As long as they have the illusion of choice, they are a lot happier about following the process," Caliri said.
For larger meetings, Caliri said, the company has tried e-auctions, but factors into the process "service and gives it weight and priority." A recent meeting contracted through an e-auction, she said, wasn't awarded to the lowest bidder, as the procurement team documented the negotiated discount as well as the value the bidder offered through service quality rankings.
"You tell us what's relevant, we'll tell you the best way to manage it from a process and strategic viewpoint," Caliri said of her advice to businesses.