Hotels Adjust Rate Programs

<B> Hotels Adjust Rate Programs</B>

By Maria P. Vallejo

Now is the time for travel buyers to keep their eyes open for better deals in hotel preferred corporate rate programs, as chains this year expand and revamp their offerings.

The global nature of travel is forcing hotel companies to re-evaluate their existing programs, which have focused on domestic properties. At the same time, hotels are noticing the growing ability of small- to medium-size companies to shift market share, prompting chains to expand their reach beyond their traditional large-company customer base.

"Hotel companies need to recognize that all customers, regardless of their size, need equal attention," said Dan Geller, president of WizBizWeb in San Rafael, Calif., who helped develop Sheraton's three-pronged rate program. "They should be judged in terms of their ability to control and consolidate their business."

Hilton Hotels Corp., Hyatt International and Starwood Hotels & Resorts are among the chains recognizing the changing nature of buyers and restructuring their programs for a tighter fit.

Trying to capture the global market, Hilton is expanding its as-yet-unnamed rate program to offer a single point of contact to overlapping domestic Hilton and global Hilton International accounts, said Steve Armitage, sales and marketing vice president and managing director. That contact will be based on the same continent as each firm's headquarters. For example, the Germany-based Siemens Corp. account will no longer be handled by U.S. managers, although it has a large office in California.

Individualizing its program even more, Hilton plans to eliminate a room-night requirement to join its preferred rate program. Instead, it will focus primarily on a corporate cutomer's ability to increase its market share as the relationship develops.

"The last thing we want to do is negotiate with a corporation that didn't increase its market share but negotiated its rates downward," said Kevin Kelly, managing director of worldwide business travel sales. "We place most of our emphasis on the customer's compliance, policy, communication vehicles and marketing vehicles."

Hyatt also is broadening its program to include more corporate members. Developed more than five years ago, Hyatt's National Corporate Account Program doubled its membership last year, adding about 50 accounts, for a total of 90 current members, said Joan Lowell, vice president of individual travel and electronic distribution. The company plans to add another 45 members this year.

"More companies are taking a closer look at their travel and managing their travel more," said Lowell. "For any of these national accounts programs to work, you have to partner with the company. We looked at which companies were already giving business to Hyatt that would qualify for the program now, where in the past they were not as managed."

Hyatt also has targeted companies with the biggest travel spend and those that have a large amount of travel to major cities, such as Chicago, Los Angeles, New York and San Francisco.

To join, a company needs a minimum of $500,000 in annual room revenue and must use five or more properties. In return, it can receive up to 30 percent off rack rates.

Hyatt plans to add even more soft-dollar services to the program, including upgrades upon arrival to Business Plan, Regency or best available rooms; a toll-free help desk telephone number; online reservations and an expanded 800-Checkin Program that lets travelers register via a toll-free telephone number prior to arrival.

The new program will use feedback from focus groups of individual travelers, travel buyers and hotel employees, which will begin in April or May. The program is expected to roll out this summer.

Meanwhile, Starwood in January expanded its three-pronged program, which used to include only its Westin and Sheraton brands, to now include Luxury Collection/St. Regis and Four Points as well.

"We've merged the best customers from Sheraton and Westin," said David Van Kalsbeek, senior vice president of sales and marketing. "They get a broader selection of hotels. It also allows them to leverage their combined volumes because we really didn't change our requirements."

The plans cater to small, medium and large accounts on a global and domestic level. The most grandiose of those programs is the Global Preference program, with 90 members, primarily multinational accounts such as Hewlett-Packard, IBM and Siemens. "Now that we have improved our technology, we are able to handle things better for our larger corporate accounts," Van Kalsbeek said. "We wanted to ease the negotiations process with us."

Requiring a minimum of $1 million in room nights, the program offers members a single point of contact for negotiations and automatically enrolls travelers in Starwood's Preferred Guest frequency program.

Targeting medium-size, regional companies, the Starwood Executive Traveler Preferred program has 355 members, each of whom buys about $500,000 worth of room nights a year. This program is ideal for European companies that have employees traveling on a limited regional basis, Van Kalsbeek said. Most members use between five and 10 properties in a region.

Global Preference and SET Preferred have a minimum requirement for eligibility, but also base the size of an account's discount on the volume it brings the hotel. Starwood also offers the Starwood Executive Traveler program, which gives all 16,000 members the same flat 5 percent discount off corporate rates in return for at least 100 room nights a year.

While these companies are in the process of changing their programs, they may be revisiting them again soon as the impact of technology makes tracking and tweaking them simpler to do, Geller said. Hotels will be able to offer customers the opportunity to receive lower rates as their volume builds throughout the year.

"The buy will be interactive and the buyer will have a minimum and maximum rate, but when they book in the system they will be able to find a better rate if the hotel opens and extends the program," Geller said. "This way the buyer gets a better rate and the supplier is able to create demand in a time when they need it most.