Buyers Go Longer Term For Key Rooms
<B>Buyers Go Longer Term For Key Rooms</B>
By Bruce Serlen
Travel buyers increasingly are making longer-term commitments in return for the midweek hotel room coverage they need in the primary business cities.
Faced with an even more acute shortage of such rooms in 2001, buyers are considering strategies ranging from negotiating room blocks to directing travelers to a chain's properties in cities with less demand in return for the promise of availability at properties in high-demand destinations. Likewise, buyers are booking extended stay properties and interim housing units that they wouldn't have considered otherwise in an effort to free up the rooms they need in regular business hotels.
Expressing buyer frustration, Georgina Smith, director of strategic sourcing at U.S.A. Networks, addressed the room allotment option at last month's Travel Technology World. "It's so difficult to get rooms in New York or Los Angeles. Your entire program runs the risk of becoming shaky if you can't get people into rooms in cities where they need to travel all the time," she said.
Access to available rooms often comes down to the relationships buyers have in place with the hotels, Smith said. "As the buyer, this could mean, 'I help you in x cities, in return for which you help me in a city like New York,' " said Smith, who is based in New York.
As a strategy, room allotments appeals to buyers because it's a form of insurance. "We've given it serious thought," said Richard Del Colle, global hotel program and meetings manager in Hewlett-Packard's corporate travel management group, based in Burlington, Mass. "As long as we were working with three travel agencies, it would have been difficult to coordinate. But now that we've announced we're going to work with a single agency, Atlanta-based WorldTravel BTI--and that means a single hotel desk--room blocks become a much more attractive option."
The basic appeal is travel managers knowing in advance that they have the availability they might need in the hard-to-book destinations. Yet, questions remain. "Are you expected to buy the rooms seven nights a week or just the four or five nights you have the greatest need?" Del Colle said. "If, for example, we could release rooms with 48-hours or even 72-hours advance notice, that would make the idea much more appealing."
Del Colle realized that this kind of arrangement would require close managing by the agency on a day-by-day basis, but that a single hotel desk would make it feasible. "We might start with a small block in certain hotels where we bring a lot of room nights and then adjust the block upwards," he said, "assuming everything went smoothly."
Carrying the room block strategy one step further, other buyers have begun to negotiate extended stay and interim housing deals because they were finding it difficult to get the access they need. "We're negotiating for corporate housing units as part of our hotel program because of the tight supply in our major destination, which is our headquarters city of Austin," said Kevin Maguire, travel manager at Tokyo Electron America.
In fact, corporate housing units accounted for about 25 percent of the company's hotel needs in Austin this year. That number will rise to 35 percent in 2001. "Day-in, day-out, these accommodations are more cost-effective than the hotels we usually use," Maguire said. Booking them also takes some of the pressure off the city's existing full service and limited service hotel stock. "We use 20,000 room nights in Austin a year and a similar number in San Jose," he said. "The Austin situation should improve somewhat in 2001, as some new properties come online, but room availability will still remain fairly tight."
Tokyo Electron America is one of six companies that have organized into the Corporate Travel Consortium and plan to submit RFPs for hotel and car rental for 2001 (BTN, March 20). As evidence of CTC's potential negotiating leverage, Maguire said that between his company and one of the others in the group, International Sematec Corp., they will bring 30,000 room nights to Austin in 2001.
Extended stay properties also are being pressed into use as a way of alleviating the need for regular business hotel rooms. "Our parent is going through a lot of integration due to recent acquisitions and, as a result, is bringing more relocations and consulting assignments to the city," said Rose Alvies, travel coordinator for ING Security Life in Denver. "We'll book extended stay properties for these employees and consultants, which means we don't have to find them regular rooms." Even more to the point, the company has begun housing two travelers in a two-bedroom, two-bathroom suite, when appropriate. "As long as people have the privacy of their own bedroom and bathroom, they're usually fine with the arrangement," she said.
Alvies said that Denver wasn't typically thought of as one of the cities where demand for midweek hotel rooms had outstripped available supply. But, as is in other urban markets, Denver is composed of a series of submarkets. "There's been a large amount of hotel construction nearby the new airport, but that can be a considerable distance from other parts of the city where travelers need to be," Alvies said.
Extended stay properties across the board have seen increases in the number of guests who, in less high-demands periods, might have been booked into regular business hotels. "Transient bookings at extended stay properties ranged from 16 percent to 45 percent last year, depending on the price point of the property," said consultant Mark Skinner, a partner in The Highland Group in Atlanta, which studies extended stay properties.
For their part, hotel companies said they were trying to be responsive to travel buyers' needs in negotiations, but that they focused first on satisfying the demand for rooms from their key accounts. "Many of our customers are looking at room blocks for 2001," said David Ogilvie, vice president of global corporate travel for Starwood Hotels & Resorts in New York. "So, we are working with them to offer this. It can be three, four or five rooms a night at a certain hotel; the exact number varies, depending on the customer's situation."
The cut-off period can vary as well. "For our top corporate accounts, it can be as little as 24 hours prior to arrival," said Chris Riga, senior vice president of sales and marketing for Swissôtel Hotels, based in New York. "For large accounts, the room block is a great way to go. For a limited number, we will even suggest it and, in some cases, offer it."
At Starwood, room blocks typically come with a 48-hour cut-off. "So, up until 48 hours prior to arrival, those three, four or five rooms are available to the customer at the negotiated rate," Ogilvie said. "Usually, it's for every night. Most often, buyers are looking to have it for the peak nights: Tuesday and Wednesday.