<B>Schering-Plough Corp.</B>
<I>Saving By Using Fewer Hotels</I>
By Chris Davis
Upon request by division managers to further cut meeting costs, Schering-Plough Corp. is rolling out a program to restrict meetings to eight hotels in four U.S. cities. In doing so, director of travel services Mike Doran hopes to shave 5 percent to 10 percent off its $3 million meetings spend. The move comes less than one year after Schering-Plough's agency, WorldTravel Meetings & Incentives, slashed $500,000 from the pharmaceutical company's meetings budget.
Under the terms of the program, which likely will be mandatory for corporate meeting sponsors, the eight properties would guarantee Schering-Plough a reduced, though not fixed, rate and an increased level of amenities, including more complimentary guest rooms and upgrades. Doran hopes to have the program fully implemented by the third quarter.
He has designated one primary meetings hotel in each of the chosen areas--Atlanta, Orlando, San Diego and northern New Jersey--and will guarantee those properties the bulk of its meetings in each particular city. A secondary property will receive the rest. The meetings affected will be those held by Schering-Plough's research division, which held 52 meetings in 1999, most of which lasted for only a few days and involved between 25 and 150 attendees. Given that the meeting sites were scattered throughout the country, Doran believes limiting hotel options will lead to direct savings and better service. "It's not just the cost perspective that we're concerned with," Doran said. "We want to stabilize the level of quality in the events, which is as important for us as the savings."
When research division managers asked Doran to reduce costs and increase quality standards, he reviewed the program with WTMI, which previously cut spend by 15 percent through a combination of consolidation efforts and better negotiations with suppliers. In studying the division's property booking habits, Doran realized more strategic site selection could result in better deals. After choosing the four areas--selected because of easy air access and Doran's desire to offer sponsors some options in destination selection--he went to each city to study the offerings of each contending hotel.
"We don't need a lot of bells and whistles at the hotel for the doctors and investigators," Doran said. "They're there for two days of intense meetings and then they're out." He looked for properties with strong quality, well-maintained guest and meeting rooms and a high level of audiovisual support. "We also looked for hotels that were willing to work with us to maximize our savings potential and their revenue potential, as they could get eight or more meetings per year instead of two."
Since the program is not finalized, Doran, who is based in Madison, N.J., declined to name the properties involved. "When we tell them who is primary and who is secondary, we will tell them exactly what they're going to get," he said. "For example, we'll be able to anticipate about 15 meetings in Atlanta and the primary property will get 10. After that, we'll talk about the rates that result from the volume guarantee and the additional amenities that we'll get."
While Doran would like a flat, guaranteed rate, it's not a deal breaker, he said, since seasonality concerns don't make it a particularly feasible option. More important are the amenities the eight hotels will include in their meeting contracts. "We want amenities that will reduce our cost and increase the meetings' quality, like VIP upgrades and more discount or comp staff rooms, instead of just receiving one comp room for every 50 booked," said Doran.
Kaye Mulkeen, COO of WTMI, said Schering-Plough is providing a blueprint for a cost-effective and sensible meeting program strategy. "This is exactly how companies should look at meetings, and Mike is a pioneer," she said. "It makes perfect sense from a financial and service perspective to find out where internal clients prefer to meet, and drive volume there. This program looks at all the angles." WTMI won the Schering-Plough account in late 1998, when the corporation shifted its meetings business from a small, local agency that did not have the volume to leverage better contracts.
If the program proves successful, Doran hopes to implement it in the sales and marketing division, Schering-Plough's other large area of meeting expenditure. "We're in the real infancy stages of introducing this concept into sales and marketing," Doran said. "We'll have to prove the program's value first, and show them that the benefits will be the same. We want to finish this project before we really take a bite there.