Indep. Hotels Push For Biz

Independent hotels in both the United States and abroad see a significant opportunity to increase their market share next year by offering for the first time the option to use the electronic request for proposal form.

By improving their members' ability this fall to respond to buyers' requests to bid on their hotel needs, marketing firms SRS WorldHotels, Leading Hotels of the World and IndeCorp are attempting to give the large multi-brand hotel chains a much greater run for their money than ever before.

For travel buyers, many of whom are under intense pressure to cut costs in 2002, having a centralized source to get RFPs returned electronically from independent hotels is a significant advantage. It allows them to get more bids, and more competitive bids, in a given city, particularly on the part of the multi-brand companies with properties in that market. There will be more negotiation and more cost-effective rates eventually should result.

"We're actively working with these firms for 2002," said Erin Barth-Wilson, Credit Suisse First Boston vice president of global travel. "The properties they represent tend to be very upscale and add to the diversity of our program, particularly in international locations." She said the firms quickly are becoming "as powerful a force as the multi-brand chains" in these locations, adding that "RFP support is crucial to this growing role."

Through their respective national and global account sales efforts—and their networks of sales offices around the world—such large multi-brand companies as Marriott International, Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide always had dominated this aspect of the business. By contrast, properties that are members of the representation firms, particularly those outside of the United States, don't necessarily have the ability on their own to respond electronically to RFPs. A widely accepted practice in the United States, electronic submission of the RFP data still is somewhat unusual for hotels in parts of Europe and Asia.

Starting late this summer, the marketing firms that represent hundreds of independent properties stepped up their push to capture more of this corporate business, which the hotels value for being both lucrative and stable. The development then gained further momentum when the terrorist attacks last month led to another contraction in business travel.

Next year clearly presents an opportunity for the independents to take a larger part of the market, according to Ed Brill, senior vice president of New York-based SRS WorldHotels, which represents more than 400 hotel properties in 65 countries.

"Specifically with the RFPs, it was time to intensify the value that these properties could offer our best corporate customers," he said.

Unexpectedly, the current economic slowdown, compounded by a further decline in demand as a result of Sept. 11, were catalysts for the shift. "There's no question that we're pushing harder for 2002," said Kenan Simmons, vice president of sales for Leading Hotels of the World, which also is based in New York. "Even in today's economy, our contracted business is up over last year. It's a chance to get a bit more aggressive with corporate buyers and get more of these properties included in their hotel programs."

This year, Simmons said, Leading Hotels would work with 207 of its members from 70 countries on responding to RFPs. Other Leading members won't participate in the centralized RFP resource because they also are part of multi-brand companies and, therefore, receive support on RFPs through the brand affiliation.

"Members see a real opportunity for themselves in the corporate market this year," Simmons said. "It remains a very desirable business for them."

The firms provide their members with information on potential accounts, as well as RFP technological support. "Through our Web-based tools, members find out different corporate accounts' travel needs, how they handle decision making, even how they want to be approached," said Bob Van Ness, vice president of sales for Chicago-based IndeCorp, which includes Preferred Hotels and Summit Hotels. The 70 Preferred Hotels that participate mainly are in North America, while the 110 participating Summit Hotels are mostly in Europe, Asia and South America.

Typically, the conduit for information about the corporate account are the firms' sales managers, who are based in the city or area where the account makes its travel decisions. "It allows the hotel to get to know the potential customer very well," Brill said.

In advance of the bidding season, member hotels provide the basic information about their location, facilities and amenities to the firms' electronic databases. "This way, the static information is already in the system," Van Ness said.

From the hotels' perspective, they're looking to get RFPs from as many accounts as possible. "You need to be sure a firm representing you is pressing its accounts enough on its needs, so that you're absolutely invited to submit RFP data whenever it makes sense," said Alexandre Scarvelis, general manager of the Hotel Pont Royal in the Saint Germain des Pres section of Paris that works with SRS WorldHotels.

Once a buyer lets the firm know there's interest in receiving an RFP from a hotel, the firm alerts the property, typically by e-mail, and requests that rates be added to the existing static information. "It could be an open request, that we're looking for bids from any hotel in, say, Boston, or that we're looking for a bid from a particular hotel in Boston," IndeCorp.'s Van Ness said.

Certain systems then automatically compare those rates against the consortia rate and other benchmarks. "Should the proposed rates not be competitive, we'll go back and ask that the hotel resubmit," SRS' Brill said.

At the local hotel level, the account information tends to be valuable. "Regarding rates though, we get a lot of strategic advice, but rates are still generally influenced by local market conditions," said David Fardon, director of marketing at the Stoke Park Club in Buckinghamshire, located near Heathrow Airport outside of London and a member of Leading Hotels.

Simmons noted that these services parallel the support provided by the multi-brand companies' regional sales offices to their local properties. "Similarly, the general manager or director of sales and marketing has the final sign-off on rates," he said.

The firms pride themselves on their flexibility, being able to "work any way the client wants the data," Van Ness said. They support the new modular RFP electronic format introduced by the National Business Travel Association in January, but also can forward RFPs using NBTA's former long format.

In April, SRS WorldHotels signaled that this year was going to be a turning point when it acquired JBH Travel Audit, a third-party vendor that offered RFP support to both corporate clients and hotels. Renamed Nexus World Services, it began providing this expertise solely to hotels.

"By stepping up the push to use RFPs to get more corporate bookings in 2002, all we've really done is try to level the playing field," Brill said. "What we've done is give the independents the same advantage the multi-brand companies have enjoyed."

For the independents, 2002 is looking like a kind of wake-up call. "If they don't get onboard, they simply risk being shut out of these channels," Van Ness said.

Across the whole spectrum of corporate hotel programs, it's hard to obtain an accurate estimate as to what percentage of them are using electronic RFPs for 2002.

"The number is hard to pinpoint because some have their own tools, while others work with travel management companies," said Mario Sagastume, senior vice president for business development at Lanyon Inc., a third-party provider. "But when you factor in all size programs, somewhere between half and three-quarters are using an electronic format to some degree."

Size definitely seems to be a determining factor. "Probably 95 percent of companies whose hotel spend is more than $10 million, for example, are likely to be doing RFPs electronically," said Sean Shelton, CEO and CIO of third-party vendor Uversa International. "The smaller the hotel program, the less likely they are to use the technology."