Buyers Draft Hotel Blueprints For 1999

<B> Buyers Draft Hotel Blueprints For 1999</B>

By Maria P. Vallejo

Many travel managers are finding that bigger is not always better as they attempt to cut costs and consolidate the number of preferred properties in their 1999 hotel directories.

In a common battle cry, travel buyers from Mariner Post Acute Network, Philip Morris, PricewaterhouseCoopers and Whirlpool are drafting stricter hotel policies and using fewer preferred properties. Each has a unique story to tell of the mergers, revisions and technology skirmishes they faced on the way down that long road.

"Everyone is driven by finance and cost cutting," said John Lowry, supervisor of meeting planning and hotel programs for Philip Morris in New York. "T&E is a very large expense for a company, and there's all this pressure to reduce things in any way possible by deeper negotiations and further consolidations."

Lowry's sentiments are echoed by many of his counterparts. Whirlpool corporate travel manager Judy Steinke reduced the number of hotels in her directory by more than 50 percent, to 198 properties. To counterbalance the smaller number of hotels, the company plans to use Maritz's agency rates for smaller-volume destinations.

In reviewing last year's hotel directory and travel reports, Steinke often found second-tier destinations like Nashville having as many as 10 preferred properties. The ones that were being primarily used for group business were cut from the directory. By consolidating her business and adding 10 percent more new properties, Whirlpool was able to get the same rates in its midpriced hotels this year as last.

Steinke's next project will be the rollout of a new remote electronic expense reporting product on Feb. 1. Developed in-house, the system is attached to Whirlpool's intranet, where travelers can access the company server from any location. It allows employees to submit expense reports for electronic approval, and to track their progress through the reimbursement process. Travelers booking outside of policy must provide an explanation in order to file their report, and managers see red flags on items that are out of policy during the approval process.

Thus far, the remote electronic expense reporting test has included about 900 expense reports from 85 users. "After we're in this for a year, it may be time to look at another system that is already developed," Steinke said. "But this way was much less expensive for us to develop."

<b><CENTER>Call From Philip Morris</CENTER></b>

With a little hard work and a lot of negotiating, Philip Morris reduced the number of hotels in its directory this year by 30 percent. The company reduced its directory to 340 properties this year by selecting fewer hotels in some major cities and removing properties in smaller destinations where its travelers used less than 300 room nights, Lowry said.

Most Philip Morris travelers stay in midpriced hotels that offer food and beverage, a sector of the market that has shown some willingness to negotiate rates, Lowry said. He believes these hotels are attempting to strengthen their relationships with corporate customers before an economic downturn.

"The high end is growing rapidly," he said. "I saw more negotiating in second-tier cities and secondary locations. I felt that other hotels were becoming a little more aggressive because some of them know they could get more for their rooms."

As a result, Philip Morris's room rates this year were several percentage points lower than Lowry had expected. "The hotels are trying to be more proactive before there's a drop-off in travel," he said. "Some are saying the industry will slow down next year or in 2000. The smarter hotels are working on that. They want to keep the relationship through good and bad times."

Lowry is using American Express agency rates to keep costs down in small and some medium-sized destinations. "If I use agency rates, I can do just as well and sometimes better than if I negotiate. This way travelers can choose what hotels they want," he said, adding that he is concentrating on high- and mid-volume properties. He defined high-volume cities as those with 10,000 to 15,000 room nights, and mid-volume cities as those with 2,000 to 8,000 room nights, such as Atlanta, Dallas and San Francisco.

For Lowry, last room availability stood side by side with consolidation as a goal for 1999. Although he was able to get hoteliers to apply his corporate rate to every room in the property, at least in theory, he felt that many on-property staffers remain confused about the exact definition of the term, he said.

While Lowry and Steinke were able to concentrate on enhancing their current hotel programs, other travel managers are dealing with programs beginning almost from scratch.

<B><CENTER>Managing A Merger At Mariner</CENTER></B>

Lou Togneri, travel manager for Mariner Post Acute Network in Atlanta, is realizing the challenges behind rolling out a mandated hotel program to travelers who never before had set guidelines.

Following a July merger, the travel budget at Togneri's former employer, Mariner Health of New London, Conn., expanded from $4.5 million to about $15 million.

"I'm just trying to survive right now and get things up and running," Togneri said. "I'm not refining or re-enhancing, because they had no program, so there is no integration. It's all about consolidation and bringing them under a single umbrella."

Although the firm's consolidation may have given it greater buying power, it also created a challenge for Togneri in trying to corral all travelers under Mariner Health's existing hotel program.

"We're trying to convince the travelers that they need to come through us," he said. "They've been accustomed to doing what they want, booking on their own and through mom and pops. We're countering this by saying if they don't book through us, they don't get reimbursed."

For 1999, Togneri renewed contracts with 60 properties from Mariner Health's 1998 directory and added 40 new hotels. About 20 properties with small volumes were removed from the list. In areas with no preferred hotel, American Express agency rates will be used by the 1,400 travelers in the combined firm.

Togneri, who works primarily with midpriced Hampton Inn, Holiday Inn and Sheraton hotels, was able to negotiate the same rates as last year with some partners, while rates at others increased 3 to 4 percent. He attributed some of his success to negotiating with individual properties rather than through chain headquarters, but also realizes he soon may have to give up this practice. "I've never been a big player in the past and I might get more attention now, but I'll continue to do it this way until I get something concrete from a nationwide chain," he said.

<B><CENTER>PwC Goes Global</CENTER></B>

Struggling with the same merger mania is Kathleen Harrington, travel and financial analyst at PricewaterhouseCoopers of New York. By the time the Big Six accounting firms of Price Waterhouse and Coopers & Lybrand merged on July 1, the travel team already had chosen global car rental companies and launched a new American Express corporate card. Now Harrington must focus on creating a global program to manage the firm's mammoth $210 million hotel spend.

"Our ultimate goal is to get the hotel program rolled out worldwide," she said, "because we not only merged, but merged worldwide. We have done chainwide agreements before, but they weren't worldwide agreements."

Rather than negotiating on room nights alone, Harrington used the Price Waterhouse hotel-negotiating style, using the total expected revenue from PwC travelers as her primary bargaining chip. "The difference was getting the buy-in from the chains to understand where we wanted to go," she said. "It's overcoming the hotels' fear of what they're going to get upfront."

She already has signed four global chainwide agreements to accommodate PricewaterhouseCoopers' 140,000 employees worldwide in an unmandated program. The 1999 directory will list about 2,000 midpriced and upscale hotels and be posted on the company's intranet site, another new venture for PwC.

The travel department also is beta testing online booking systems that will allow travelers to book negotiated hotel rates over its intranet site. A decision is imminent and rollout is expected to begin by July 1. Bookings will link to PwC's agency, so it can continue to monitor the firm's travel.