<B> Buyer Raises Hotel Bar</B>
By Maria P. Vallejo
Seagram Company Ltd. has set an ambitious travel management goal for next year: raising compliance with its global hotel program from the current 65 percent to a whopping 80 percent.
To accomplish that, Seagram plans to expand the number of preferred hotels in its portfolio, partner with major hotel companies for chainwide deals and enforce the use of its preferred travel agencies worldwide, said Jonathan Stobart, global travel management finance director at Seagram's in London.
Company officials are confident they can achieve their goal since most travelers already support the established global card and airline programs, each of which now garners 95 percent compliance rates. "Our travelers are very willing to embrace our global programs. This is just an evolution," Stobart said.
Now moving into its second year, Seagram's global hotel program will increase the number of preferred properties from 220 in 1998 to 300 next year, Stobart said. The new hotel list will be published on Seagram's corporate intranet by the third week of December and the official guide will be published by January.
A delicate balance must be maintained between the number of hotel properties and the corresponding compliance rate, Stobart said, since research indicates that compliance tends to level off when the number of preferred properties rises beyond 300. "I think 220 is a little bit light, but if you keep adding hotels to a program, at some point it becomes ineffective," Stobart said. "Getting the balance right is critical. We needed a greater number of properties to get the optimum number on the distribution curve."
Seagram's 1998 global hotel program reached 65 percent compliance. It offered an average 25 percent discount off standard corporate rates and 5 percent off Carlson Wagonlit's negotiated rates, Stobart said.
Stobart must take into account the hotel needs of travelers in its three disparate divisions: Seagram Spirits & Wine Group, Universal Studios Inc. and the soon-to-be- included Polygram. Minneapolis-based Carlson Wagonlit Travel, Seagram's consolidated global agency, handles the administrative processing of the global program. Universal Studios continues to use Los Angeles-based Hoffman Travel Services to book its travel, but Hoffman uses Carlson's global hotel program for Universal.
Although one might expect the development of the 1999 global program to be a relatively easy task, since it expands on an existing program, Stobart faces new obstacles with this year's negotiations. Seagram sold Tropicana Products Inc. to PepsiCo. on Aug. 25, and will acquire Polygram by the end of this year.
These structural changes will shift Seagram's specific property demands, and conceivably change the hotels included in the 1999 listing. At this point, the company does plan to include more properties in England, Singapore and Spain.
For this year's global program, Seagram weeded through more than 1,000 hotel bids from properties worldwide. Starting in August 1997, Stobart sent out 350 requests for proposals, and received back 775 bids. After special consideration for properties already included in the existing Carlson and Hoffman hotel programs in North America, Stobart reduced the list to 220 hotels.
"We were using lots of properties in a lot of cities," he said. "It was a challenge because the three business groups had different needs."
During the initial process, Stobart had to consolidate data and specific needs of the three companies it then owned: Seagram, Tropicana and Universal Studios. At the time, Stobart and his team worked on the administrative portion of creating the global program, including sending out RFPs and sifting through returned bids. Now, that process is outsourced to Carlson. The majority of the information used to negotiate for contracts last year was based on data received from American Express, Seagram's mandated corporate card. Negotiations were handled regionally, but all information eventually returned to Stobart for final approval.
For 1999, simply adding new properties to the list will not be enough to assure higher traveler compliance. Stobart therefore is in discussions with 10 major hotel chains for global chainwide deals, which he hopes will help offset the need for property locations not included in Seagram's preferred hotel list. If a hotel is not included, travelers will still be able to get negotiated rates with properties in the preferred chains.
In addition, global deals will help Stobart receive better data from his hotel partners and better track travelers' compliance for future negotiations.
"We needed to fill in some areas and provide a safety net with the chainwide deals," he said. "For 1999 we are taking the property-chain approach. We're looking at better quality data and developing relationships with some chains. Hotels are the next evolution with high quality data for our data warehouse."
The success of the global hotel program also relies on travelers using Seagram's agencies to book their accommodations. Seagram received 80 percent compliance among U.S. travelers booking through Carlson or Hoffman. In Asia, compliance levels dropped to 70 percent, and in Europe they further declined to 60 percent, Stobart said. Seagram will open a consolidated agency center in London in January to help increase European booking compliance through its agents.
"We needed to drive a greater use of agency and preferred lists, particularly in Europe," he said. "Now we will have one person who lives and breathes Seagram.