Cos. Mixed On RFP Process

Third-party electronic hotel request for proposal vendors this year reported an increase in the number of small-to-midsize programs signing up for their services. Yet, travel buyers whose programs fall into this category remain ambivalent: Some said the time savings make formal RFPs worth pursuing, whether through a third party or on their own; others insisted their programs were just as well served by handling the RFP informally, essentially relying on the relationships they have in place at the hotels.

"I'm going with an electronic RFP because of one word: survival," said Carol Ann Bakeman, travel buyer at Aecom Technology Corp. in Los Angeles. "It's my responsibility to get the hotel program done efficiently. I'd drown in a sea of paper otherwise."

Bakeman expects Aecom, a consortium of architecture and engineering firms, to have 40 hotels in its 2004 program. "For a new property, it just takes me five minutes once the RFP is completed and returned to enter it into the tool's database," she said. The third-party tool Bakeman uses has the capability to send an agreement letter electronically. "Once the letter is signed, we're ready to go."

Health Care Service Corp. will use an RFP for 2004, but will do it in-house. "We only have about half a dozen major locations, so we use the National Business Travel Association's standard RFP form," said Teresa Powell, the Chicago-based company's senior manager of corporate travel services. "We've managed the process ourselves in recent years, rather than through an outside vendor, and are doing so again for 2004. It's the best way to keep the process simple."

To save time, Pitney Bowes' Connie Cirillo Freeman will use an RFP, but has distilled the lengthy electronic NBTA standard into two pages that hotels fill out manually. "We'll basically be looking for rate quotes, as well as location and safety and security information," said Freeman, director of global travel management in Stamford, Conn. "We'll then call hotels and deal with them on an individual basis."

Freeman expects to have 40 to 50 hotels in the 2004 preferred directory. "Beyond that, we rely on our agency's consortia rates," she said.

By contrast, some find they do better not using an RFP form at all. "They are too cumbersome and detailed," said Patricia Carlin, travel manager for Sybase in Dublin, Calif. "We'll negotiate directly with the hotels instead. Our travel volumes still are down, so by negotiating directly we feel we'll get deeper discounts."

Sharon Varel, corporate travel manager for Formax Inc., a manufacturer of heavy-duty equipment in Mokena, Ill., has one chainwide deal. Otherwise, she prefers to work one on one with hotels on an as-needed basis. "It's just the nature of our business," she said. "When we're doing an installation, we'll bring a lot of room nights into an area, but only for three or four months. It just makes sense time-wise for me to contact the property directly."

Cheryl Geib's program at Grant Thornton in Oak Brook Terrace, Ill., includes 50 locations. More than two-thirds of them though draw less than 100 room nights a year, too few to warrant a formal RFP. "Consequently, we rely on the relationships we have in place," said Geib, national travel and meeting manager.

Likewise, Colleen Guhin, global travel manager of ON Semiconductor in Phoenix, next year will opt to rely on her existing relationships. "I'm looking at who our preferred partners are this year. If they offer attractive rates for next year, why make them go through the RFP process?" she said. Guhin expects to have 80 hotels in her 2004 program, close in number to those included in 2003. "Increase that number by 25 percent and it might be worth my doing a formal RFP, but not now."

Third-party providers typically use 100 as the minimum number of hotels required to justify a formal electronic RFP, though buyers sourcing as few as 10 hotels have used it. "The number of cities and number of room nights matter less than the number of hotels when it comes to building the solicitation list," said Brian Langer, vice president of sales and marketing for RFP Express.

With even fewer than 100 hotels, buyers can find themselves overloaded with paper. "Managing hotel RFPs is just one small part of many buyers' jobs these days," said Jo Ann Baynes, co-founder of Uversa International. "They don't have the back-up to do all the administrative work, and that's what an electronic RFP eliminates: administrative work."

Still, Bob Peper, president of LodgingLogistics, said, "Relationships are key, regardless of the size of the program. Yet, an electronic tool comes in handy when buyers have so much to do. They need to streamline the process so they can avoid spending all their energy chasing down RFPs. If anything, using the tool frees them up really to pursue the relationships."

Third-party suppliers are sympathetic to the tradeoffs in terms of time. "Buyers tell us the big question becomes, 'How much time do I have to manage the process and could that time be spent in a way that's more beneficial for the program,' " said Karen Richard, managing partner for hotel solutions delivery at Eclipse Advisors.

Submitting formal RFPs can help buyers establish contact with hotel chains' national account managers. "Even for small programs, a few key national account manager contacts can be crucial," RFP Express' Langer said. "One RFP then can be used for all the hotels in one NAM's group."

Given all the personnel changes on hotel sales staffs, not to mention the frequency of hotel brand conversions, RFPs are a way for buyers to keep current. "Even for programs with less than 100 hotels, buyers can be hard pressed to stay up to date by relying solely on personal relationships," Uversa's Baynes said.

In considering whether to submit a formal RFP, buyers should not be dissuaded because their programs carry no mandates. "It's not a significant factor in this market," LodgingLogistics' Peper said. "Sure, there are hotels out there that have such expectations, but many others are willing to offer negotiated rates well below their published rates to buyers who really have no way to ensure they can drive marketshare in return."

The real benefit of submitting RFPs electronically may go beyond time savings. "It allows buyers to view the industry from a larger perspective," said Mario Sagastume, senior vice president for business development at Lanyon. "The standardization that NBTA has brought to the RFP process means buyers can go out and investigate a wider range of entities and, as a result, make more informed choices—choices better suited to their travelers' needs."

This benefits the hotels as well. "Certainly, their first choice will be to get the big accounts," he said, "but travel volumes are still down across the board. Consequently, the small-to-midsize programs will be of more interest to them this year. Yet, if they're not approached with RFPs, there's no way they can benefit."