Leading Hotels To Corp. Mkt.

By BTN / March 11, 2001

Leading Hotels To Corp. Mkt.

Paul McManus, president and CEO of Leading Hotels of the World, spoke with BTN hotel editor Bruce Serlen recently about how travel managers can address availability and get the hotel coverage they need in key cities.

BTN: As a membership organization of all-deluxe independent hotels and small chains worldwide, how does Leading Hotels work with travel buyers?

Paul McManus: We serve as a facilitator between the corporate buyer and the hotel in putting together a hotel program that's easy to arrange. We help the buyer cut down on administrative tasks and help with the negotiation process on the hotel's behalf. In this way, we provide a service to both sides. For the past several years, we've taken a much more proactive role on behalf of our members. Where previously we were solely a reservation processing company, we've evolved into a more integrated marketing company.

BTN: Why?

McManus: The model for the hotel representation business changed. What existed in the past doesn't exist anymore. As an integrated marketing company, we try to create programs that generate sales activity, not only process it.

BTN: How many hotels do you represent in this way?

McManus: Of our 380 members, we negotiate on behalf of 162 that do a large percentage of corporate business. Really, it's the majority of our business hotels. We call this aspect of our service the Consolidated Negotiated Rate Program. In many ways, it's not that different from the service provided by a global chain's national sales office to the chain's individual properties.

BTN: How involved do you actually get in rate negotiations?

McManus: We facilitate the negotiation process. We represent to our hotel clients what the market is saying relative to rates. So we give them guidance and direction. Ultimately, the decision on rates is theirs, yet, more and more, the hotels are relying on our judgment as to what's appropriate and they're taking our suggestions. To some degree, this is also a reflection of the nature of these hotels.

BTN: Meaning what?

McManus: For the most part, these are classic luxury hotels. Service levels tend to be very high, with valet service, full breakfast and 24-hour room service. Their focus is inward, on service--the delivery of the promise, so to speak--more than it is on the business side. That's really where we give them depth and help them in the marketplace. They rely on us to facilitate the business part of that relationship.

BTN: So your average business traveler is a fairly senior person?

McManus: Precisely. Typically, senior executives travel without their staffs today, so the hotels are designed to provide them with the level of service they would have in their corporate offices. The service is provided without question, it's seamless and it's effortless. The hotel concierges are especially observant and attentive to the business traveler.

BTN: How would you describe the state of the independent hotel today?

McManus: Many of these properties find themselves at a disadvantage. In competitive markets around the world, all of our properties might be independents. And the trend seems to continue: major chains acquiring independent hotels and small chains at an accelerating pace. Yet, working through us, our member hotels have all the marketing programs that the chains offer their hotels and, at the same time, they retain their independence, their own yield management and their own operations.

BTN: How would you sum up the recently concluded 2001 negotiations?

McManus: Availability was a critical issue, especially in the major cities of the world and in the most central locations in those destinations. Given this environment, the 2001 negotiations went more smoothly than ever before. The whole RFP process is such a labor-intensive activity. If you look at the time period, so much has to be done in such a short period, it doesn't allow for a long courtship. We need to make decisions and we need to make them quickly.

BTN: Are travel buyers using your hotels to supplement their programs in key cities to get the coverage they need?

McManus: By all means. Most of our business hotels already participate in these programs on the local level. They're negotiating with their key corporate accounts on their own, so our efforts are in addition to that. We're also able to offer buyers a multiplicity of product in certain destinations. Take New York, for example, where we represent nine hotels. As a result, we have a pretty good feel for what a market like New York is doing.

BTN: What strategies would you recommend to the travel buyer having a difficult time getting coverage in key cities during peak periods?

McManus: We've begun recommending that our hotels in these destinations work more with key clients on an allotment basis. A hotel might provide, say, five rooms a night to a key account with a 24- or 48-hour cutoff. It will mean less work for both sides, if buyers aren't desperate to find rooms at the last minute. Increasingly as the technology improves, we think allotments will become more of a solution. Similarly, the same technology will make it easier to cancel unwanted rooms. In another way, the Internet is opening up all sorts of possibilities for providing inventory at the last minute, which, if the situation is right, could ease the availability crunch.

BTN: What might some of these Internet possibilities be?

McManus: We're in the final stages of developing a kind of Internet-based alternate distribution network. We'll invite our hotels to put their products into it as they choose. Let's say they get a cancellation next week on a group booking or they unexpectedly find themselves with an excess of rooms, they could use the distribution network for this purpose. Our regular corporate clients then would have a password or something to give them access to the network. The rooms may not be available at the negotiated rate, but there's a good chance the rate at which they are available might even be lower than the negotiated rate. Also, it's not clear at this point if the room nights would count toward any volume commitment a buyer might have made to that property.

BTN: With rate negotiations for 2001 concluded by the end of December, the next challenge was getting the rates loaded in a timely way. How did that go for your hotels this year?

McManus: As with the RFP process, the time allotted for rate loading is very short and the process is very labor intensive. There's tremendous pressure. Buyers, of course, have a right to expect that the rates will be loaded on the date agreed upon. But, on behalf of the 162 hotels, we're loading a countless number of rates. This year, thanks to the technology we have in place, all rates were successfully loaded on schedule.

BTN: Working with such a large number of independent hotels, is it hard to assure buyers that travelers will find a consistency of experience?

McManus: Not really, considering the level of hotel we're dealing with. Yet, with our quality assurance program, we inspect each of our hotels twice within every contract period. For business travelers, it guarantees they'll find a certain level of performance and consistency. We partner with a firm that performs the inspections. What we're really trying to do is give these independent hotels and small chains access to the types of services that perhaps in the past only were available through the major chains.

BTN: Because many of your hotels are grande dames, have they had to catch up to offer in-room technology and business centers?

McManus: The hotels offer every technological service they can, but it's not in your face. You don't have to go to bed looking at the fax machine. And in the same way that business travelers are driving technological advances, they're driving the growth of spa and fitness facilities.

The hotels are prepared to personalize the fitness experience, if the guest prefers, rather than require the person to go to the regular facilities. They'll bring weights and exercise bikes to guest rooms, for example. The guest profile has changed: It's younger and even business travelers who are older recognize the importance of physical fitness. It's become part of the traveling routine.

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