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Take Away


RFI and RFP Experienced procure- ment professionals use a two-part process before nego- tiating with and selecting a vendor. Step one is the RFI (request for informa- tion). This is usually the point at which a vendor provides its indication of interest, availability, and desire to take the next step. The RFP (request for proposal) follows after that. Expert planners will apply a two-step process of narrowing the field through an analysis and grading of the RFIs, and then require that only the finalists go through the exer- cise of a thorough RFP response.


 Dave Lutz, CMP, is managing director of Velvet Chainsaw Consulting,www .velvetchainsaw.com, a business-improvement firm specializing in the meetings and events industry. His company assists organizations in realizing top- and bottom-line growth by delivering customer- focused solutions in business development, best-practice and process improvement, strategic planning, and training.


People & Processes By Dave Lutz, CMP


Stop the Madness!


Our profession is at risk. More small meetings, shorter lead times, and RFP abuse are on a collision course for commoditizing an industry that shouldn’t be commoditized. Hotels are reacting by throwing technology and lower-level sales professionals against the problem. This model is not sustainable.


Group meetings are big business.Even a small meeting of 25 rooms for three nights can deliver revenuenorthof$20,000—hardly chumpchange. That kind of business shouldn’t be sourced the same way that office supplies are purchased. Indeed, while big chains and brands receive the lion’s share of groupbusiness, the facts are: 1)Hotel ownership is extremely fragmented, and 2) inven- tory is perishable. These dynamicsmakefor a com- petition-rich environment, where a planner’s deal- making expertise can make a big difference, one transaction at a time.


Cost of Sales and Close Rates Anyhotel executiveworthhis or her salt tracks the cost of sales and close rates in real time. The average planner today is sending out13to15RFPs to hotels—and only one can win. Often, hotels end up on a planner’s grid where it is difficult for


Hotels are experiencing RFP overload and need help prioritizing which opportunities call for their best efforts and resources.


them to be differentiated beyond date availability and initial price quote. Hotels acknowledge that close rates are declin- ing and try to resolve the cost-of-sales problemby


automating responses or replacing more highly compensated strategic sales executives with trans- actional staff.These decisions takeaway a hotel’s Xfactor for consultative selling and dealmaking.


We Need Transparency Hotels are experiencing RFP overload and need help prioritizing which opportunities call for their best efforts and resources. Hotels will work a lot harder to earn your business if they know they are on the short list and are able to differen- tiate themselves.We can improve transparency in themeetings industry sourcing process with these three strategies: 1. Planners should disclose the number and


names of hotels and/or destinations under consid- eration. 2. Planners should allow qualifying discus-


sions before responding to anRFP. Hotels should strongly consider not bidding on business where they cannot differentiate. 3.Hotels should be honest about group busi-


ness that is not the right fit for them vs. not responding to theRFPor claiming the dates are not available.


Matchmakingvs. Market Scanners Some planners think that by doing a thorough market scan and creating impressive-looking grids that they are justifying their existence. Smart exec- utives evaluate employeesontheir results, notonthe amount of work that it took to get there. Planners whoviewthemselves asmatchmakers—andbring the besttwoor three options to the table—will be held in higher regard than their transactional coun- terparts.Thebestway todothat is to research and limit the field before theRFPstage. 


ON_THE_WEB: Meeting-procurement initiatives often follow the lead of corporate travel best practices. Stanley Slaughter of Air & Business Travel News offers a peek into what that future might hold in “RIP: The Traditional Corporate Travel Policy?” at convn.org/RIP-travel-policy.


ILLUSTRATION BY BRAD YEO pcmaconvene April 2012 33


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