Marriott Seeks Intranet Room

By BTN / April 08, 2001

Marriott Seeks Intranet Room

Last month, Marriott International senior vice president for distribution sales and marketing Bruce Wolff briefed BTN hotel editor Bruce Serlen on changes in Marriott's approach to the managed travel market.

BTN: When you negotiate with corporate clients, do they tend to get one rate for a brand or a set of rates?

Bruce Wolff: Our corporate sales effort is structured like a triangle: One side is large strategic accounts, a second side is major multinational accounts and the third side is national group sales. But, in all cases, we don't like to give one rate because of the disparity of rates around the country. A New York hotel, for example, is much more expensive than one in Omaha. Similarly, we don't like to give 1 percent off all rates because if you don't go to Omaha, what's the point of having a discount there? What we try to do is structure the deals around where the travelers go. That makes the deal of greatest value to the traveler and of greatest value to the owner of the hotel.

BTN: Considering that Marriott has multiple brands, are you seeing buyers extending their coverage in a market by negotiating with more of your brands?

Wolff: We've seen steady progress in this direction. Whether because of availability or other factors, buyers are realizing we have an array of product that might meet their needs. They get a win and we get a win when they actually target the purpose of the traveler's trip to the product that best meets that trip's needs. Other companies that have just one product have to make all solutions fit that. You know the old expression, "If all you have is a hammer, everything looks like a nail."

BTN: This past year, you've promoted the concept of "yieldable rates" to travel management companies. Exactly how does this work? And as you introduce the approach to corporate buyers for 2002, what do you see as its primary advantage?

Wolff: Essentially, if the buyer can show flexibility at certain peak times of the year, we can provide a better rate the rest of the year. In other words, I can give you an attractive rate on the understanding that on those few peak days of the year, you would pay more. In this way, the deal becomes good for the corporation and good for Marriott. Our experience with the travel management companies confirmed that there were a lot of people who were happy to stay at a better rate than they would have gotten had they had last room availability.

BTN: Many buyers fault hotel companies for following the yield management practices of the airlines. Do you think hotels can perfect these techniques any more than they already have?

Wolff: It's true that hotels came to the party late. It's also true that hotels have some encumbrances for total yield management that airlines don't have. First of all, it's a more complex product. Second, it's not centrally owned like the airlines. When I used to run revenue management for an airline, I never called the local terminal, say in San Diego, and said, "Hey, what do you think of having this rate San Diego-New York?" We implemented it. In the case of hotels because of individual owners, each of our 2,000 properties has a say in what the final rate decision is. And this is true for negotiated rates as well. In fact, it's something that colors just how we can negotiate.

BTN: Many buyers have expressed unhappiness over blackout dates and minimum length of stay requirements built into the global distribution systems when negotiated rates don't apply. How do you respond to this criticism?

Wolff: Minimum length of stay requirements are employed by virtually all hotel companies. Actually, I believe they're in the best interests of the corporate traveler, because they ensure availability across the peak days of the week. Accordingly, a business traveler who wants to stay across the three or four peak days wouldn't be served by a system that allowed another traveler who had only one night's interest to block out his or her ability to stay the four nights. So the traveler actually benefits from a program that realizes that people need blocks of travel and manages the room inventory to ensure we get the best use of the hotel.

BTN: In markets where availability has been a major concern, some buyers have negotiated room allotments. What's your view of these room blocks?

Wolff: There are a few isolated situations where we do that. In general, once customers realize that a room block means taking responsibility for the inventory on days when they may not need it, they show less interest. So it's not a prevalent practice.

BTN: But isn't the burden on the buyer to call to release the rooms?

Wolff: But the burden becomes greater when they ask us to release the rooms and we say we don't need them either. Otherwise, it's not really a room block. It's just a commitment from us to you that we'll make rooms available. It's not a commitment from you that you'll use those rooms. On occasion, what happens is that buyers tend to use those rooms last. They say, "I know I have five rooms hidden in this hotel and so I'll book rooms in other ways until things are tight and I have to find a room. Then I'll go to one of those five and use it. As a result, the five become the last rooms sold. It's a back up.

BTN: With all your efforts to centralize the national accounts negotiating process, do you still see much negotiating going on at the local property level?

Wolff: The one thing corporations--and individuals--have come back to us loud and clear with is that they don't really want to negotiate at the local level. They're not interested in calling the San Diego property to get a rate. They want to be able to call a central site and get it there. Companies based in San Diego may want to deal with the people across the street, but they tend to do business with lots of our hotels over a large array of locations. Consequently, we've put in place systems to help corporations reach that central site where they can get all the answers they need.

BTN: But many buyers insist that they often can get a better rate by going directly to the property.

Wolff: A number of our competitors are still in a situation where customers benefit by going to each property directly, even if it means a long distance call or multiple calls instead of one. But we have rational pricing and single image inventory systems in place. Single image inventory, in particular, means all of our rates and all of our inventory are available through all of the channels.

BTN: Are you seeing much interest in corporate accounts combining their individual and group spend as a way of leveraging their negotiating power?

Wolff: Our position here goes back to the premise underlying all our negotiations: Sell the way the customer wants to buy. Originally, we found that most companies handled the group sales process separately. Consequently, we sold to the decision makers separately. But we're finding that companies are slowly consolidating that activity, so we can have a sales force that sells all product, both group and transient. It's still not an overwhelming trend, however.

BTN: Travel buyers do not always meet their volume projections. Is that a major concern for you?

Wolff: First of all, there are management tools coming in all sorts of areas that improve a company's ability to manage its own spend. What we find is that companies that provide a certain degree of freedom to their travelers to determine their lodging needs fare the best. This tends to work for Marriott because we have such a preferred series of brands. As a result, given the choice, the traveler wants to stay with us. Compliance then follows.

BTN: Are you considering providing a direct connection to your large clients through their intranet sites?

Wolff: Yes, in that it's one more way to get closer to the customer. In fact, Marriott.com is actually on the intranet sites of some test companies right now. We're also working on an integrated solution that will put air, hotel and car all on selected corporations' intranet sites, which will give these companies' travelers the seamless ability to make all their reservations for a trip.

BTN: What will Marriott's role be in this? And do you bypass the GDS?

Wolff: We'll facilitate. We know just having Marriott on the intranet site isn't sufficient to meet all the traveler's needs, so we want to work as part of a coordinated program. It's direct and you go right into the negotiated rates for your corporation. In some cases, yes, you bypass the GDS.

BTN: Would you say this is the wave of the future?

Wolff: There's enormous talk around bypassing GDSs, but we have a lot of respect for them in terms of their astute management. So we're confident that the leaders of the GDSs will respond to changing market conditions. Some of that response could come in the form of lower GDS fees.

BTN: What's the status of the direct connect test?

Wolff: Primarily, we're working with companies that have the technological infrastructure to utilize this sort of thing. We think we should be ready to move forward by year-end.

More