<B>Hotels Follow U.S. Cos.</B>
By Bruce Serlen
Faced with increasing expansion in Europe by such U.S.-based hotel companies as Marriott International and Starwood Hotels & Resorts Worldwide, European hotels not part of major chains stepped up their own RFP activity in the negotiations for 2001 rates. By so doing, they sought to retain, or increase, their share of the lucrative U.S. corporate market.
Marriott and Starwood are among the large hotel companies whose European portfolios grew significantly in 2000, mostly through acquiring management contracts on existing properties, as opposed to new builds, in the region's key gateway cities (BTN, Nov. 13, 2000).
For travel buyers responsible for hotel programs that include such cities as London and Paris, working solely with the major chains in today's tight market often doesn't provide adequate coverage, forcing them to look further afield in order to guarantee they get the coverage they need. In addition, with location still being the prime driver, whether it's a U.S. or international destination, independent hotels in these cities or those that are part of a modest-size chain might be the ones in the closest proximity to where travelers need to be.
Occupancy rates from business travel in these European cities remained high throughout 2000. "Midweek nights, Tuesday and Wednesday especially, were very strong and we actively welcomed RFPs from corporate accounts to protect and expand that business in 2001," said Gul Gurel, director of sales at the 400-room Royal Garden Hotel in the Kensington section of London.
While part of Singapore-based Goodwood Hotels, the Royal Garden still doesn't have access to the sales and marketing reach of the major chains. "Consequently, we looked increasingly for this kind of support in 2000 from such marketing groups as Summit Hotels which we're affiliated with," Gurel said.
Given the amount of expansion into such a market as London by the major chains in 2000, these affiliations, already part of the marketing plan, became more important as a way of gaining much-needed visibility. "Not only did we receive RFPs through Summit, but we were put forward for various marketing programs that we would not have been aware of otherwise," said Mark Anderson, corporate sales manager.
In light of their more limited reach, Europe's non-chain hotels are more apt to confer national account status on a U.S.-based corporate account and, thereby, get certain preferences on both rate and availability. "Going into 2001, an account needs only to give us a 100-room-night volume commitment to be given this status," said Claudine Caussignac, director of sales at the Millennium Opera Hotel in Paris.
One of two Millennium Hotels in Paris, the Opera property has about 200 national accounts this year, about twice the number of local accounts. "This is not to say, however, that the local or regional accounts don't give us more room nights," Caussignac said.
Like the Royal Garden, which looked to its marketing affiliations as a conduit for RFPs, the 163-room Millennium Opera drew support from a larger entity--in this case its parent organization, Millennium Hotels, which has properties around the world.
Tuesdays and Wednesdays are the busiest nights in Paris as well, with the Millennium Opera frequently sold out, mostly to business travelers. As a result, last room availability in Paris in 2000 became more of an issue than before, as it did in key U.S. cities. Caussignac only negotiated LRA selectively for 2001 and then only with the hotel's best accounts. "What we mostly try to do is manage the room count very carefully so as to avoid difficult situations," she said.
Another trend Caussignac saw in negotiations for 2001 was room allotments. "For our best clients, we'll book a certain number of rooms every night--typically the number is only one or two," she said. "The client then has from two to seven days in advance to cancel, if the rooms aren't going to be needed."
While blackout dates frequently are an issue in negotiating LRA at U.S. hotels, it's less of a problem in Europe. In France, these dates are "fair periods," meaning there is a large exhibition or show in the city that's tying up a large number of rooms and, consequently, making LRA irrelevant. "But we'll be forthcoming about it from the beginning," Caussignac said. "Plus, it's likely to be no more than 15 days a year total."
In certain cases, buyers ended up including too many Parisian hotels in their 2000 programs because they were concerned about not getting the coverage they needed, according to another local hotelier.
"Because of the demand for rooms, especially midweek, some clients signed with 15 hotels and then ended up using only five or six," said Herve de Gouvion Saint Cyr, director of U.S. sales for the 250-room Hotel Lutetia, which is part of Concorde Hotels. "For 2001, we were determined to work with fewer companies, but create a stronger partnership with those we did work with. In this way, we expect we'll get a greater percentage of their market share."
Saint Cyr said the Lutetia had reduced the number of its preferred accounts by 40 percent. "This will allow us to provide availability to clients that really use us and not just in peak periods, but consistently all year. After all, in a market like ours, rate is important, but availability is even more so.