While the National Business Travel Association's hotel committee is making only minor adjustments to its electronic hotel request for proposals format for the 2004 bid season, it is planning a more sweeping overhaul for 2005, including changes requiring reprogramming. The hotel committee, which expects to announce its 2005 plans next month at NBTA's annual convention in Dallas, intends to issue the early warning to alert travel managers, as well as hoteliers and third-party providers, that they will need to budget accordingly for next year.
A key change to the RFP entails the use of geo coding to more closely match the location of a hotel in relation to a company's offices in a given destination. In light of the importance of the proximity of a hotel to company offices, this question also is being moved from the RFP's "geography and transportation" module to the core pricing module.
"For the 2004 season, we kept the changes to a minimum, basically just redefining some questions to clarify further what we were asking," said committee chairman Beth Caligiuri, who serves as a strategic procurement manager at The Coca-Cola Co. "Part of the rationale was that we didn't want to adjust the format in a way that would require reprogramming so soon after launching the current format in 2002."
While the changes for 2005 are extensive, they do not alter the modular approach first adopted for 2002. "Buyer acceptance has been high overall, with the number who are using the standard growing each year," Caligiuri said. "Our sense is that buyers now are comfortable enough doing the RFP electronically and with how the modules work for us to be able to make some significant improvements without affecting usage levels."
In addition to the pricing and geography and transportation components, individual modules in the NBTA format are devoted to services and amenities, safety and security and communication and technology. A separate module is devoted to buyers' extended stay hotel requirements. Lastly, buyers who have questions not addressed by any of the regular modules can fill in the user-defined module, specifically designed for this purpose.
For 2005, the committee has proposed deleting fields that were underutilized, while adding fields that have surfaced as important buyer concerns. "We also are taking the opportunity to rearrange questions in an effort to streamline the process further. A question we're rearranging, for example, is the one concerning hotel-to-office proximity," Caligiuri said. "It's so important that the hotel be convenient to the company's office, most buyers ask this question. Plus, if it's all the buyer needed to know from the geography and transportation module, moving it to the core pricing module means the buyer can bypass the geography and transportation module entirely."
With the exception of the core pricing component, the modules basically contain static information, meaning the information does not change from year to year.
"The proximity question, on the other hand, is different for each company, which in itself is the reason it did not really belong in the geography and transportation module," said Jo Ann Baynes, co-chair of the committee's RFP subcommittee and co-founder of Uversa International, a third-party RFP provider. "In the same way, all company-specific questions belong in the core module, since that's the module that changes company to company. From the hotels' perspective, it's much easier to respond to the RFP if they need only update the core module, rather than the entire RFP. In the case of the proximity question, hotels often would leave it blank because they simply didn't know the answer."
To reinforce the importance of proximity, the committee starting in 2005 is adding a question to the geography and transportation module based on the geo coding technique. "In responding, the hotel will be asked to enter its longitude and latitude, which the buyer can compare to the longitude and latitude of the company's offices," Baynes said.
As accepted as the modular approach has been since its 2002 introduction, hotels outside of the United States have been slower to adopt the system, stating that some questions don't apply to them. The 2005 overhaul will attempt to address these inequities. "We always are trying to make the questions more global in nature," Caligiuri said. "In certain international markets, hotels just do things differently."
As an example, Baynes cited the pricing policy for single and double rooms. "In the U.S. pricing model, there are single and double rates. In Europe, by contrast, they might have a rate for a single person in a double room that differs from the rate for a single person in a single room," she said. By making some of the pricing fields easier for international hotels to respond to, the committee expects to see higher international adoption starting in 2005.
At Carlson Hotels Worldwide, management expects that "all domestic hotels and most international hotels" will respond to electronic RFPs this year—and in a timely way, according to Bjorn Gullaksen, executive vice president for full-service brands. "The most important thing for buyers to understand about international hotels is that they quote their rates in local currency. Because if rates are quoted in U.S. dollars, the rate will change due to currency fluctuations," he said.
For such a strictly international company as Spain-based Sol Melia Hotels & Resorts, the challenge is not simply the pricing piece.
"With 323 hotels in 30 countries, there are bound to be language and computer systems issues, but there's no question the local hotels want to master them," said Jamie Spinney, regional director of corporate sales for the northeastern United States. "They understand electronic RFPs are the future. Often what makes the difference is having a structure in place that follows up to ensure responses are consistent and complete."
While the modular approach replaced a longer, more cumbersome version, some buyers still feel the format provides more information than they require or have time to process. Consequently, these buyers customize the NBTA format to better suit their needs. "We worked with a hotel consultant this year to develop an RFP that's based on the NBTA form, but that focuses on the areas of most importance to us," said Karen VanBuskirk, senior principal and corporate travel manager at AMS. "The tool also will be available to hotels on the Internet, so they can go on to the Web and give us their responses. The whole RFP process can be so time-consuming that using the Web this way should be a major time-saver for all parties."
VanBuskirk noted that the customized format was designed with the particular needs of her company's travel patterns in mind. "Much of our consultants' travel is project-based, which means a fixed number of travelers will be in that destination for a fixed period of time," she said. "Accordingly, we can negotiate with a hotel that, in return for an attractive rate, that property will be the preferred supplier."
Another complication is that VanBuskirk is considering conducting reverse online auctions in select markets. With reverse auctions, the request for information phase proceeds as usual, but the pricing and negotiation phases of the process are handled differently.
For 2004 at least, many buyers' hotel programs will be smaller than they were in the banner year of 2000 or even 2001. "It's the result of the continuing weak economy and downturn in travel volumes," said Joe Carino, president of The Carino Collection, a hotel representation firm. "Many buyers consolidated their programs last year—both in terms of the number of cities where they have negotiated rates and the number of hotels per city—and they're holding the line at the same level this year. For hotel sales people, this means it's going to be harder than ever to get a greater percentage of that buyer's marketshare in a given city."
As a result of many corporate hotel programs getting smaller, Carino said he expected more companies would develop their own internal RFP process this year, as opposed to adopting the NBTA format. "Alternately, they would use the sections of the NBTA standard that are most relevant to them," he said.
Some buyers with small to midsize programs continue to question the need for a formalized RFP at all. "Frankly, we don't use RFPs but rely on personal relationships that we've built with our hotels instead," said Terry Sullo, manager of travel and meeting services for Akamai Technologies. "We don't have the negotiating leverage that huge programs enjoy, so it makes more sense for us to make sure the hotels understand that, by working together, each side can realize its goals."
Given the importance of the core pricing module, the Web-based RFP tool developed by Eclipse Advisors breaks the module into two. "One piece concentrates on the proposed hotel rates, while the other piece focuses on property information," said David Caldwell, general manager for hotel consulting business development.
Like other proprietary tools developed by third-party providers, Eclipse Advisors takes the NBTA format and enhances it. "We've built in a feature, for example, that tracks the negotiation process and another that provides the buyer's prior history with a given hotel. Both features are intended to provide the buyer with more comprehensive information as the RFP process moves forward," Caldwell said. "After all, the process can get quite complicated when you're dealing with multiple hotel chains, contacts and management companies, getting information to them all and getting it back in a cohesive, timely way. The system, for instance, allows buyers to designate their points of contact on the hotel side, which expedites tracking."
Lanyon, another third-party provider, uses the NBTA format as a template. "From that template, buyers decide what information they really want to obtain from the RFP," said Mario Sagastume, Lanyon senior vice president of business development. "We then extract that information to the buyers' specifications once the bid has been submitted, so all they see is the crux. It's a way for them to build their own program."
The logical extension of these tools, according to Sagastume, is to use them to tackle the chronic issue of getting the rates loaded accurately into the global distribution systems
(BTN, June 23). "We're already assisting hotels with the loading of approved rates," he said, "so buyers and agencies have begun asking for this same capability so they can do it themselves."