Suzanne Neufang on Growing HRS's Presence in the Americas

• HRS's strategy in the Americas

• Sourcing with independent hotels and chains

• Virtual payment

A little over a year ago, hotel solutions company HRS established its first U.S. office, hiring former GetThere CEO Suzanne Neufang to head expansion in the Americas as the region's vice president and as managing director of North America. Since then, the Americas staff has grown from one to 25 employees and has established a U.S. client base that accounts for more than $350 million in annual hotel spend. BTN lodging editor Julie Sickel spoke with Neufang about expansion and what to expect in the year ahead.

BTN: How did Year One go?

Neufang: We served our first U.S.-based sourcing customers last year, so our season with our new sourcing team went quite well. Some of them were global engagements that were originating here, so it wasn't just U.S.-focused. We've had such great conversations with independent hotels around the country. Our hotel sales team is growing, as well as the corporate sales team, so it's on both sides. We serve both sides, supply and demand.

BTN: How do you typically work with U.S. corporate clients?

Neufang: [For] a typical U.S. sourcing customer, 80 percent of what we source for them are chains. We're pretty average when it comes to the amount of chain versus independent for a large U.S. multinational, especially where over 50 or 60 percent of their business is in the United States. That's very typical. We're not anti-chain; it's just that we're pro-independent. Our whole methodology for sourcing is just, "Let's source what we can get better rates on, and let's not source where you have so little volume that you're going to get an average public rate." Why even bother sourcing those? Let us do a better job of getting a better-than-public rate in those places, but let's do a great job of sourcing what we can. We save on average about 9 percent year over year on a sourced program. Some of our largest customers say it's actually higher, what they see on their side, and so we're really happy with that. We also get a higher response rate during the RFP season.

BTN: How much of the global sourcing that you do for your clients is approaching new hotels, and how much is just using hotels you've already signed with?

Neufang: Certainly when someone contracts with us to do sourcing and they've got a corporate location where it's less about savings and more about location, they say, "We'd love to work with you, but here's a list of our hotels," and maybe 5 percent of them we don't have. Our group of 380 hotel solutions experts goes and starts getting those hotels into our system. We aren't just a consultant at the front end for sourcing; we also have that back end, that team who also knows who the hoteliers are. If they're not in our system, we go get them, on behalf of the corporation. Our experts both provide systems where the hotels need it. So extranets for them to manage their rates and their inventory, which gives them visibility into what gets shown in our booking tools, or distribution channels. Whether that's [online booking tools] or [global distribution systems], we provide that conduit for them as well. So it's really a win-win for the hotel because they're now a hotel that can welcome other corporate customers, and we bear the cost for GDS entry. Then what we ask for is the commission of return for giving the hotel that new business and that new distribution channel.

BTN: Do you contract much with extended-stay hotels?

Neufang: We're adding them this year. We'll work with extended-stay properties at a chain level, and we're also re-architecting our hotel platform to be able to include all the bells and whistles from a hotel side. Hotels have lots of rules about how they deem a stay as extended or not, like it has to be seven or more days without a break. They have their list of internal rules, and our new platform coming out at the end of the summer will let hotels set up all of these extended-stay rules. It makes it, both from a demand and a supply side, very relevant. We're being asked about that a lot more than we used to be.

BTN: You've brought in some new hires, most recently Jeffrey Hillenmayer, who was with Lanyon.

Neufang: Jeff is leading the Americas sourcing team. He has expertise from seven or eight years of being in the managed corporate travel consulting side with Advito and then with Lanyon. There's a small team in North America and a small team in Latin America, so he oversees them. He'll also be the go-between for all of the sourcing process questions and have a lot of corporate client direct interaction. Our sourcing platforms have been around for about five years, but we last year launched a new RFP tool, so we keep reinventing what we have, and Jeff's expertise from an Americas perspective augments the great Western Europe and Asia expertise that we've had.

BTN: What kind of data does HRS provide to its clients? Are you offering standard reports or do you customize it based on what the client wants to track?

Neufang: We certainly have standard reports that go out to our customers about booked data, cities, rates—in that way, we're sort of playing the travel management company role. In terms of strategic data, when we start an engagement with sourcing, we don't begin without a look at past history of bookings. We'll do something that we call a savings report, where we compare just what [a company] booked last year or last quarter with what our customers got. We can determine, "On 10 percent of your bookings we could have provided you savings, on 85 percent we were on par and on 5 percent we would have lost, so on average you would have saved more with us." Another thing we do in our sourcing process is look at [the client's] portfolio across the board, specific to negotiated rates. We'll do a deep dive on negotiated rates at [the client's preferred] properties with the target cities, at the target location, and within a very small distance we'll also look at what similar companies booked and got as their negotiated rates, so we'll do a like-for-like comparison. Those reports are highly actionable. Then, knowing that data, we'll ask, "What is your strategy for sourcing next year, how do you balance savings and traveler satisfaction and which hotels do your executives never want to give up?" That will set the basis for the sourcing approach.

BTN: What is HRS Americas focusing on in the year ahead?

Neufang: The story is still growth. We're still staffing up. We have a larger East Coast establishment than a West, so growing there. In terms of solutions, our focus is growing our sourcing practice. We're launching our new virtual payments and Paperless Travel payment solutions in the U.S. and Latin America in the fall and then growing with our small-meetings product. Then we're just continuing to build our portfolio across North and South America.

BTN: Tell me more about that virtual payments and Paperless Travel piece.

Neufang: [Virtual payment] is great because it's online, it's one-time use, it's identifiable to a single traveler and a single trip. With Paperless Travel, the virtual credit card pays for a hotel booking, we collect the invoice—it's paid through the issuer normally—then we digitize it and give 99 percent of that [line-item data] back to the client in the format they prefer. Nobody else does that today. There's a code that [enterprise resource planning] systems read, so it's ready for [value-added-tax] reclaim. It's ready for fraud detection. Clients can see, at X hotel, everybody takes breakfast, maybe I should negotiate breakfast into the rate next year.

BTN: What kind of training or outreach is HRS doing to make sure virtual payments will be accepted at hotels?

Neufang: What's different about us is we have these hotel relationships. Our 380 hotel-facing experts are already talking to our portfolio of hotels and saying, "We have this. This is how it works. Let's do some training." For chains, it's easy; we go to chain level. We do massive WebEx meetings [with hotel staff]. No other card issuer has those relationships. TMCs certainly don't with some of the non-GDS properties. There's always that piece missing unless you have that circle of supply and demand, and we've got both sides of the relationship.

BTN: So HRS works with hotels, corporate clients, GDSs, TMCs. That's a lot of hats.

Neufang: Right, we don't fit into a box; we're a GDS, a travel management company, an online travel agency, a consultancy, a tech company and a data and business intelligence company. We aren't a direct competitor to any one group. We have people looking out of the corner of their eyes at us, from several different areas, and that sort of puts us in a unique position where we're hard to categorize. We're going deep into hotels, anything that touches hotels.