<B>Owners Weigh In On RFPs</B>
By Bruce Serlen
While major hotel chains reach out to travel buyers at the country's largest corporations through their national accounts programs, groups of hotel owners and operators this year have begun marketing to buyers much more actively.
These owner/operators control a good deal of the U.S. hotel inventory. Their names--including Destination Hotels & Resorts, Lodgian, MeriStar Hotels & Resorts and Richfield Hospitality Services--may not be as well known as Hilton, Marriott or Choice. Indeed, their names frequently are covered by the flag of one of the major chains or are behind individually named independent properties. Given the strength of the lodging business in many markets today, however, these owner/operators are interested in making sure their properties capture a healthy share of that business for themselves. Consequently, they're working actively with travel buyers in their own right, now that the annual RFP process is getting underway in the coming weeks.
Yet, these owner/operators are clear that they are not competing, at least not directly, with the national sales efforts of the major hotel companies. Rather, they view their efforts as complementing what the majors are doing, certainly when it comes to the local property level. Any overlapping sales calls are simply an oversight rather than an intentional strategy, they said.
For travel buyers interested in putting together an effective hotel program, the stakes are basically the same when dealing with any hotel company sales team: negotiating the best rates based on achievable volume projections, attempting to negotiate things like last room availability whenever possible and then working to drive compliance.
"Typically, the national sales organizations of the leading hotel chains are interested in, say, the 100 largest accounts in the country because they want to set up a national, or potentially global, program for them," said Daniel Engle, vice president of sales and marketing at Lodgian, which owned and operated 134 properties at the end of 1999, including 82 that flew a Bass Hotels & Resorts flag and 20 that flew a Marriott International flag.
The large hotel companies want to get as large a percentage of these accounts' market share in a given city as they can.
"The major chains direct the RFPs they receive from their national accounts to us. We then work together to get the information as complete as possible before returning the RFPs to the clients," he said. "We provide the market intelligence, on the basis of which rates are set. The major chains may have the national picture, but we provide the local perspective."
At the same time, however, the owner/operators frequently receive RFPs directly from another set of clients. "These are the corporations that don't control enough volume to a wide enough range of destinations to warrant national account status," said Amanda Dennis, vice president of sales and marketing for Richfield Hospitality Services. "At the same time, these corporations may still bring a significant enough number of room nights to a specific hotel of ours in a certain city to warrant a negotiated rate. So the RFP from that corporation would come directly to us and be completed and returned by us."
Richfield's portfolio of 45 properties at year-end 1999 included Comfort Inns & Suites, Hiltons and Sheratons. Also included was the U.S. portfolio of Regal Hotels, which was acquired by Richfield's parent, Millennium & Copthorne Hotels.
Typically, location pure and simple is what drives the client to approach the local property directly. For example, the corporation will have an office or manufacturing plant in close proximity that attracts a large number of travelers. Hence, it can deliver on its volume projections. Complicating the situation, however, is that the rate negotiated for the hotel by the major hotel companies for their national accounts may differ from the rate negotiated locally by the owner/operator for other clients. Most often, the locally negotiated rate is lower. "The corporation is likely to be a key account in our area and we're competing on rate, which explains the lower rate," Dennis said.
Likewise, there are cases when the owner/operator has a number of properties operating under the same flag in a geographic area, so it makes sense for the owner/operator to get involved.
"We have five hotels that fly one hotel company's flag in the Washington, D.C., area, for example, so we do our own marketing in addition to the hotel company's efforts," said Pamela Suhr, senior vice president of sales for Meri-Star Hotels & Resorts. "Since we were already involved in setting consortia rates, this seemed the logical next step." At year-end, MeriStar had 116 properties in its portfolio, including 23 Hiltons, 12 Radissons and 11 Sheratons.
"We're certainly aware of how these hotel companies operate," Suhr said. "But our efforts are designed to complement their systems. We hardly intend to work at cross purposes.