RFPs BY BETTY LOW
McBride that understanding corporate objectives is invaluable. “The underlying principle is that people are buying space. There are three objectives: security, making sure that the programme they’re recom- mending ticks all the duty-of-care boxes; price leverage or product quality; and third, the guiding principle, is to create a programme to guide travellers where they would like to end up.” He adds: “The customer will hold infor-
mation about new offices, new demand, projects, acquisitions and whether the market may be shrinking.” Pauline Houston is global director of supplier management at Carlson Wagonlit Travel (CWT). She believes hotel RFPs are “absolutely not” just about cost savings. “Hotels have to be of reasonable location and good security,” she says. “Ultimately, a hotel programme must de-risk any liabil- ity.” She adds that green and other ethical criteria, such as those emanating from the ownership of a hotel company, are also being included so that hotel programmes can underpin corporate strategy.
STAYING RELEVANT Without doubt, the process is evolving. Marriott vice-president Phil Andreopoulos says: “We’re seeing a more holistic ap- proach that considers the requirements of the traveller. It’s about staying relevant to a changing workforce whose values are different to those of their predecessors. If companies have internal pressures to achieve compliance, they need to be of- fering choices that people want to make. Nobody likes to be told to stay somewhere they don’t want to be or somewhere they don’t feel comfortable.” The corporate objective can also vary
by business sector. “People operating in an industry with downward margins are very cost-oriented,” says McBride, “but for those looking to capture market share, it’s about availability, and cost is not so important. It’s specific to each customer.”
BUYINGBUSINESSTRAVEL.COM
The hotel RFP may be a buying tool, but it is only partially about cost
Moreover, hotel products and market conditions, such as capacity, will vary in different destinations. No one hotel group is likely to be able to offer suitable accommodation in every city. This could be because of location (most of those that travel on internal business want to stay at the hotel nearest the local office) or because of quality differences.
SEASONAL DIFFERENCES Seasonality can also affect rates. Mark Spivey, international sales director at Germany-based Maritim Hotels, points out the best available rate (BAR) can be lower than the negotiated rate at certain times of the year. “At the end of the day, it’s a supply and demand issue.” Revenue managers in global cities such as New York and Hong Kong don’t usually offer attractive corporate rates year-round. They know that the high demand for quality accommodation in such cities means they can fill their properties easily. However, a negotiated rate with last
room availability (LRA) – that is, that an agreed allocation of rooms will be held for the client at that price until an agreed point, say, 48 hours in advance – will guarantee availability in those cities with high demand. But this year-round rate can sometimes be higher than the BAR. Buyers might reserve the negotiated rate as their safety umbrella – the highest price they will ever pay – and buy at BAR when possible.
According to McBride: “It’s not worth
having a rate without LRA.” He argues that without that obligation, a hotel need not honour the agreed rate if it believes it can sell it elsewhere at a higher rate.
HYBRID RFP MODELS Pauline Houston says that e-RFP technol- ogy has simplified and streamlined what was once a very time-consuming process. That, coupled with different markets and corporate objectives, has led to hybrid RFP models proliferating. This has enabled bid managers to focus on variable elements such as LRA, room allocations, black-out periods on availability, breakfast, wifi and ‘Club’ executive floors. It’s about more than volumes. Capita’s
Elswood says that hotels are increasingly looking at total revenue per available room (TRevPAR), which includes additional spend such as on food and beverage. “Just saying that you produce half a million pounds in London will not leverage the best result. An overview of normal spend patterns when you are in a property can aid a better outcome for organisations. We try to break down the profile by length of stay, arrival day and so on. What the travel policy allocates to food and beverage is useful information to a hotel.” This is backed up on the hoteliers’ side
by Maritim’s Spivey, who says: “An inter- national guest will stay longer and spend more on extras than a local guest. Brits are a good clientele to have because they like to entertain and spend a bit of money.” Marriott’s Andreopoulos agrees: “We
look at arrival and stay patterns, the booking window, previous performance, what our competitors might do and, of course, the wider global relationship.”
THE POWER OF MARKET SHARE Pricing itself is also becoming a more hybrid affair. Rates might be a fixed rate or a discount based on volume but, just as with the airlines, market share is
BBT JULY/AUGUST 2014 45
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92