Starwood Hotels & Resorts Worldwide this month rolled out new pricing for small and midsize companies that may have no managed travel program in place. The effort, called Starwood Preferred Business, marks the first time a major multi-brand company has made a formal attempt to reach this niche in the market.
By offering participating companies rates that are 10 percent below corporate rates, Starwood also will offer these accounts the equivalent of a fixed consortia rate. With some leading consortia rate programs this year moving to a fluid model in which rates can change daily depending on market conditions, buyers of small and midsize programs have been at a loss for rates they can use in planning and forecasting
(BTN, Nov. 10, 2003)."Our rationale was to meet the needs of an underserved segment," said Gavin Delaney, Starwood manager of loyalty program development. "We wanted to provide some additional value to these companies, ultimately with the intent of increasing their loyalty, which will help us move marketshare."
Companies with five to 5,000 employees are eligible to participate, if their annual lodging spend is at least $10,000, regardless of which hotel companies they currently are booking. "These are general targets. At the high end, companies may have a travel manager in place. At the lower end, it may be a CFO or human resources manager who handles travel along with other responsibilities," Delaney said. "Travel isn't necessarily something this person dedicates a large amount of time to. It could be the firm's first stab at a travel policy, in this case telling travelers where they would like them to stay."
There will be no minimum number of cities where a company's travelers have to book hotels. However, travelers must book a minimum of 25 room nights a year across any of Starwood's brands, which include Westin, Sheraton, W, St. Regis/Luxury Collection and Four Points by Sheraton.
As part of the program, a company's travelers automatically are enrolled in Starwood's frequent guest scheme, Starwood Preferred Guest. Both the company and individual travelers receive points for stays. Companies are welcome to use the points they receive for regular transient or group hotel stays or to underwrite employee incentive programs, according to Delaney.
Starwood will provide quarterly account reports electronically. Total spend data is included with number of room nights. Travelers' SPG membership numbers are used for tracking purposes, though no personal information will be included in reports provided to buyers.
Delaney said the discounted rates were not envisioned as alternative consortia pricing, but as part of a larger "corporate transient rate structure." In addition to planning and forecasting, buyers with small and midsize programs—to a greater degree than large program buyers—traditionally rely on consortia pricing to fill in gaps in their program. The consortia pricing gives them rates in markets where they do not have sufficient volume to receive a negotiated rate.
Starwood is the first large multi-brand company to reach out this way to the small and midsize market. InterContinental Hotels Group in 2003 began a program called Corporate Gold
(BTN, Oct. 7, 2002). Where one part of the program was directed to large-program buyers, a second target was smaller programs that did not book sufficient room nights to warrant national or global account status. Like Starwood Preferred Business, the rate provided is a percentage discount off the regular corporate rate wherever travelers go.
Meanwhile, the Kimpton Hotel & Restaurant Group, a midsize hotelier with 39 properties, this year introduced a special loyalty rate to target this same niche with a rate that's a discount off the corporate rate
(BTN, March 15).As a midsize program buyer, Kevin Maguire, travel manager at Tokyo Electron America in Austin, Texas, often has been frustrated with the lack of response programs like his received from the large multi-brand companies. "It got better during the downturn, but in 1999 and 2000 it was hard to get them even to return a phone call," Maguire said. "Now that the market is rebounding, will they continue to be interested in our segment? That's the question."
For Starwood, IHG and Kimpton, the goal is that once they have a foot in the door with these accounts, the amount of bookings they receive will increase as the companies prosper and their travel programs expand.
"As the company grows, we'll be right there with them," Starwood's Delaney said. "Once involved in the program, we can track their spending with us and move them up to a higher-level program with even more benefits."