<B> Meeting Bids Online</B>
By Chris Davis
Online meeting auctions, offering the potential for cost savings and substantial planning time reductions, have made their industry debut on hotel search Web site EventSource.com. The functionality allows planners to solicit meetings bids from hotels in a process that takes no longer than 20 minutes.
"We're reversing the process of the corporate planner as buyer and the hotel as seller," said EventSource.com CEO Ed Sarraille.
Industry watchers were intrigued by the auction concept.
"It's an innovative idea," said Fairfax, Va.-based technology consultant Doug Fox, publisher of the EventWeb newsletter (www.eventweb.com). "This is the first in the industry, and since it's only in the early stages, it's all speculation at this point as to how it will be received. But there doesn't seem to be a real downside as long as everyone involved is clear on their responsibilities."
While Twinsburg, Ohio-based PlanSoft Corp., the meeting industry's dominant player, doesn't offer the functionality on its Web site (www.plansoft.com), president Ed Tromczynski expressed an interest in the auction concept. "We've tried to keep the information in the hands of the meeting professional and supplier so far, and anything we do would have to promote fairness to both sides," said Tromczynski. "But I think auctions in general are a real smart way to leverage the Internet, and this will be a benefit to certain corporate segments. It's not way off base, but it has to be fair, honest and upfront."
Here's how it works: A corporate planner logs on to www.eventsource.com, with an RFP for a meeting of at least 50 room nights to be held in less than six months in a specific city. The planner then works with an EventSource sales manager to determine the eight or so properties in that city that can accommodate the meeting's size, anticipated service level and technological specifications.
EventSource then contacts those properties to determine the level of interest in the meeting. Some may decline due to a lack of available space. The EventSource manager whittles the list to a maximum of six and sets an auction time with the hotels and the planner.
Before the auction is held, the EventSource manager, acting on the specifications of the planner, determines the appropriate cancellation and attrition clauses and any ancillary charges the property would work in to the contract, including meeting room and banquet room rental charges. The clauses must meet the approval of both sides before the auction commences.
As a courtesy to suppliers, the planner determines before the auction whether the meeting automatically will be awarded to the property that offers the lowest bid. This is not mandated, and EventSource vice president of sales Joe Garvey said almost all planners reserved the right to take any property involved during the test auctions.
At the time of the online auction, each hotel is given a number. Planners will know which number correlates with each bidding hotel, but the suppliers will not know which competing property is offering each bid.
The auction has four rounds. Each hotel makes an initial bid without knowing the amount of the others' bids. All initial bids are revealed to buyer and seller at once, and three similar rounds follow. At the end of the fourth, the planner selects the property for the meeting. Planners then have 48 hours to sign a contract--enough time, Garvey said, to clear the terms with the planner's internal corporate client, if necessary.
EventSource receives a 10 percent commission on the total guest room revenue of the meeting, though Sarraille said that might change. "We are investigating other transactional-type fees and arrangements," he said.
EventSource, though, prides itself on its strict policy of neutrality concerning hotels and chains. Garvey said the site will not boost its revenue by gearing meetings toward a particular property or brand.
"Some third parties on the Internet sell their listing, and some assign most-favored nation status," Garvey said. "We don't. We accept no overrides. We've done everything we know how to do for our integrity not to be compromised."
A few meetings were awarded via auction during two tests held the week before Event- Source publicly debuted the functionality. Planners invited to participate were impressed.
"Actually, it was quite easy," said Pam Taylor, training, resource and meeting planner for Pleasant Hill, Calif.-based Color Spot Nursery, who booked a 30-attendee, four-night training meeting with a Portland, Ore., hotel through an EventSource test-run auction last month.
Taylor said she worked with EventSource to narrow the range of properties, then offered her specifications for attrition and cancellation clauses, which were accepted in full by four interested hotels. She actually did not select the lowest bidder, which EventSource's Garvey does not expect to be uncommon, because the lowest bidder was not close enough to downtown Portland for Taylor's liking. After the winner--the Embassy Suites Portland-Downtown--was selected, Taylor negotiated food and beverage charges directly with the hotel, she said. The meeting, however, was cancelled before she signed a contract, but, "That had nothing to do with the auction," she said.
Taylor admitted she had concerns about the auction process when it was pitched to her, but came away pleased with the experience.
"Event- Source held my hand throughout and answered all my questions," she said. "We would have saved a little bit of money but the predominant savings was in my time, since the whole auction took 15 minutes, tops. I'd do it again."
The move was the latest in a tumultuous year of heavy expansion for EventSource, coming on the heels of an infusion of $3.7 million in venture capital from Menlo Park, Calif.-based Sequoia Capital and the appointment of Sarraille as CEO in June (<I>Meetings Today</I>, July 5).
Though industry scuttlebutt points to EventSource as a contender to be the first meetings-specific technology or Internet company to go public, Sarraille dismissed the notion."We have not entertained thoughts of an IPO," Sarraille said. "The board of directors is looking to make sure we have an appropriate, organized business model."
Only time will tell whether Plansoft, the industry's other prime IPO candidate, will add a similar functionality to its site. "Our customers will tell us, and there are some corporations that probably will like it," PlanSoft's Tromczynski said. "If they want it, we'll meet the need."
EventSource executives conceived of the auction early this year, with the actual implementation of the necessary technology taking only about 30 days, Garvey said. He wouldn't estimate the implementation cost.
EventSource ran two private, invitation-only trial runs of the auction in the days prior to the public unveiling last month. The trial runs resulted in over $200,000 in booked meetings, which Garvey said were anywhere from 25 to 40 percent below market prices and 10 to 30 percent below the hotels' collective opening bids.
The auction is password-protected and private to all but the planner, hotels and Event- Source moderator. While the site would likely be of the most use for corporate planners booking short-term meetings, Fox said, the auction might help all planners level the playing field in what remains a seller's market.
"The Internet brings more friction-free commerce, meaning that buyers will have more access to pricing information, both in their own organizations and from other organizations as well," Fox said. "Planners can know the exact price range for their meeting in a given city at a given time of the year, which will offer them a strong position in understanding the market.