In Break With Tradition, Corps. Dabble In Doubling Up

<B> In Break With Tradition, Corps. Dabble In Doubling Up</B>

By Maria P. Vallejo

In a new spin on the traditional wisdom that two travelers should never be forced to share a single room, travel buyers this year have found a cost-saving compromise. They are shifting their business to two-bedroom suites to combat the hotel industry's rising room rates.

Charged with the mission of reducing hotel costs, travel buyers at Bloomberg Financial in New York and Great West Life in Englewood, Colo., for example, report they are saving up to 50 percent--and finding unexpected social benefits--in bunking up their travelers.

"Corporations have found that some suite hotels are very nice, amenities are on the upscale side and it's a big savings," said Arvella Hackett, Great West Life's seminar and meeting planner. "It's good for one person from one office to be in a two-bedroom suite with a person from another office. It gives them cross feedback."

Buyers are vexed with trying to cut hotel costs when average daily rates continue to grow. The hotel industry's overall ADR will increase 3.9 percent this year despite a 0.9 percent decline in occupancy, according to PricewaterhouseCoopers' 1998 Annual Wrap-up and Forecast. ADR will continue to grow by 3.5 percent in 2000, while occupancy will decline by 0.7 percentage points.

Bloomberg Financial, meanwhile, "saved about 50 percent in hotel costs off of paying flat corporate rates at mainstream hotels or one-bedroom suites," said Joanne Mineo, the company's branch manager in New York.

After joining Bloomberg Financial 18 months ago, Mineo focused on updating the company's travel policy and increasing compliance among travelers to reduce overall costs. After soliciting comments and recommendations from employees, she began contracting in April with Summerfield Suites for its two-bedroom suites.

"We looked at location and amenities that make people feel at home without breaking our backs," she said. "We went from individual bedrooms to one-bedroom suites to two-bedroom suites. I took several employees of each training group and spoke to them one-on-one on criteria of location and amenities."

Before it began doubling travelers up in suites, Bloomberg's hotel costs ran about $11,000 for each of about 400 trainees a year, Mineo said. Now the company spends about $8,900 for two trainees.

With its relatively large travel program, whose 1998 air volume totaled about $6 million, Bloomberg estimated it will save about $40,000 in training costs. The expected savings will not come exclusively from room rates either. Travelers now can cook their own meals or purchase food from convenience stores located inside the suite hotels, cutting down on meal expenses and alleviating the costly use of minibars, she added.

But a surprising benefit of the two-bedroom suites was the sense of camaraderie it created among trainees and new employees. "People within the same training class began to network," Mineo said. "You see people now that are on opposite ends of the spectrum of selling raise a hand and say hello. Usually, because this is such a technology company, there is very little personal communication."

Summerfield Suites also has eliminated another major headache of housing new hires: payment of the bill. Since new employees do not receive corporate charge cards for at least four weeks after hiring, until now they have had to keep track of portfolio information and pay their bills themselves, though many do not have sufficient credit on their personal cards. But, under its contract with Summerfield, Bloomberg charges housing bills retroactively to the individual's corporate card. Mineo simply signs a letter of intent that guarantees the property that Bloomberg will pay for all costs should a trainee default or leave the program. "For me to cut a check every week for 50 travelers becomes an accounting nightmare," Mineo said. "Now, our expense reports and reconciliation have no paperwork. It's done through our system."

The use of two-bedroom suites is not an entirely new concept. Great West Life has been using such rooms for years, but moved its business to Summerfield Suites two years ago when the previous supplier raised its rates, Hackett said. Now it saves about $50 a night on an average one-bedroom suite cost of $90. For a company that holds up to 21 training sessions a year, with class sizes ranging from 10 to 35, that adds up.

But there's more behind the use of all-suite properties than just cost savings. Great West Life requires each property to have a fitness center and laundry, and to be located within a mile of headquarters. "There are a lot of things we look for in the hotels we use for seminar participants," Hackett said. "We have to have transportation available for the participants and would like some type of food and amenities at the hotel."

Hackett acknowledged that she initially was concerned about having travelers bunk with strangers for an extended time, but found the separate living facilities of most two-bedroom suite hotels helped smooth the path. Each bedroom is equipped with all the same business amenities travelers expect in a full service property. And the two bedrooms are connected by a living room, so travelers in search of privacy can retreat to their own bedrooms without needing to interact with their suitemate.

"Now that these people have been through it once, they are realizing it's not the end of the world and they survived," Hackett said. "They actually liked the hotel and felt they still had privacy."

For Summerfield, meanwhile, occupancy levels of two-bedroom suites are on the uptick, surpassing 70 percent last year, compared with 66 percent in 1993, said vice president of sales and marketing Tina Gunderson. The company has been aggressively targeting corporate travel buyers, going to the extreme of offering potential customers a complimentary full-length training course to allow them to experience the environment firsthand.

"Five and six years ago, decision makers started out with one-bedroom suites and weren't comfortable with booking two bedrooms," Gunderson said. "But if someone is in a training class, they look for a buddy anyway, and these suites make people feel very comfortable. They are not sacrificing anything; there's no sharing of the private stuff."

Each of the 36 Summerfield hotels now has 25 to 30 top corporate accounts using two-bedroom suites, she added. Most hotels have a mix of 60 percent one-bedroom suites and 40 percent two-bedroom suites.

Woodfin Suites is responding to the demand by increasing the ratio of two-bedroom suites in its properties from the current 25 percent to 40 percent, said COO Tana Farrell. Depending on location, occupancy of two-bedroom suites ranges from 75 to 90 percent.