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Buyers Consolidate Hotel Purchasing
By Michael B. Baker
OCTOBER 19, 2009 --
Travel buyers increasingly are strengthening their hotel negotiating positions in an environment where they have less demand and more clout by consolidating meetings expenditures, including combining group and transient hotel volumes. Meanwhile, Marriott International reached critical mass on a sales restructuring effort that helps support that strategy.
BTN's Corporate Travel 100 research this year showed that 54 percent of the largest travel spenders in the United States have centrally consolidated meetings management and purchasing. Lockheed Martin, for example, has consolidated meetings management for the past few years with the help of meetings technology supplier StarCite and site-selection firm HelmsBriscoe. Cisco Systems, too, recently has embarked on a complete globalization of its meeting program, aligning teams, getting vendor agreements in place and rolling out an American Express meeting card (BTNonline, Sept. 7). Deutsche Bank also is in the midst of a two-year reengineering of its $150 million global meetings and events program (BTNonline, March 16).
Similarly, a survey of 220 meeting planners by Business Travel News sister publication MeetingNews showed 55 percent either already are consolidating meeting expenditures as a negotiating strategy or plan to do so within the next year. The practice is more widespread among corporations and associations that spend more than $1 million on meetings annually, with 63 percent of them using the tactic.
As more companies move travel and meetings under the procurement umbrella, they increasingly look to leverage savings by consolidating transient and group travel into a single negotiation. The MeetingNews survey showed that about 40 percent of 131 corporate meeting planner respondents combined meetings and transient volumes, mostly for hotel negotiations but also for air.
Starwood Hotels & Resorts Worldwide senior vice president of global sales Christie Hicks said she is seeing more requests for consolidated transient and group negotiations, although it's generally only in those companies that have combined the two structurally.
"It's when they roll up to a single place or a person that we see the request for true consolidation," according to Hicks. "We have a lot of requests for similar pricing, but when we talk about strategically aligning for share shift, we are seeing a little more of that."
Elaine Kennedy, vice president of demand sales for Utell Hotels & Resorts, the hotel representation unit of Pegasus Solutions, said she also is seeing an uptick in combined transient and group negotiations. Like Hicks, she attributed it to the increasing corporate convergence of the two activities.
"In previous years, a lot of travel managers never really wrapped their arms around where the meetings were being booked," Kennedy said. "Now it's being reined in, and they're getting offered tools to make the meetings buying process easier."
Hotels are trying to take advantage of that, Kennedy said. If a property hosts a large conference or business event for a corporation, it tries to report back to that buyer for consideration in its transient program as well, she said.
Even companies that have brought together the two under a single management source find negotiating transient and group together is not always ideal, said Bob Brindley, vice president of BCD Travel consulting arm Advito. "If you have the data, it's always a good idea to analyze it and consider it, especially if there's enough group business that repeats and could be packaged with the transient business," he said.
Many hotels resisted combined negotiations in the booming years of travel but are much more likely to engage in them during a buyer's market, he said. "In the past, it was difficult to negotiate, because if you needed 200 rooms, you weren't always going to be able to lock in that many at a transient rate," he said. "Now, with occupancy down, hotels will at least consider it."
Marriott International senior vice president of corporate and international sales David Townshend said the sales restructuring initiative the company launched two years ago (BTNonline, Jan. 22, 2008) helps support that increase in transient and group volume consolidation.
"Our market account executives are total-account-focused, which includes group and extended stay," Townshend said. "If they're working with a global account and it begins to single-source, we have a single-sourcing strategy."
Marriott's sales strategy, dubbed Sales Force One, shifts its sales team out of the back offices of individual hotels and into account- and region-specific roles, providing large corporate accounts with their own personal sales contact and market-based executive support. Accenture, for example, has market executives in its key travel destinations around the world in addition to a sales executive dedicated to its strategic relationship with Marriott, he said.
Marriott launched the initiative with the opening of a regional sales office in Gaithersburg, Md., which now covers sales efforts for all Marriott brands in the mid-Atlantic region, including the Carolinas. Marriott since has opened regional offices in Chicago, covering the Midwest, and San Francisco, covering the Pacific Northwest, and in December will open an office in Boston to cover the Northeast. This will put about half of the significant markets in the United States under the sales strategy, Townshend said.
The strategy also means Marriott can give small and midmarket companies single regional sales contacts across its eight core brands, Townshend said.
"Prior to this, we didn't have any deployment to speak of focused on midmarket accounts, and neither do our competitors," he said.
Following the launch of the Boston location, Marriott will open two more sales offices, covering the Southwest and the Southeast, by the second quarter of 2011. This will bring all major U.S. corporate destinations under the consolidated strategy, Townshend said.
Marriott also is exploring ways to make that sales strategy global. "What we do internationally will look different because we don't have the product distribution," he said. "We have more hotels in Atlanta than we do in Germany, for example, but we've already begun to lay out the game plan to take this whole concept of customer-centricity outside of the United States."
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