Is cost containment possible?

Competing bids, competing interests

Fifty-three per cent of respondents whose organisations have a meetings policy indicated it includes a requirement to secure competing bids from hotels. To be sure, negotiating is rule number one when it comes to procurement and is best practice for securing lower rates and better contract terms.

While formal RFPs are “how the industry works today,” Vilovic said, there’s a risk in such a seller’s market that waiting for a competing bid could put space in another property in jeopardy.

“A lot of times it’s procurement holding this up,” ConferenceDirect’s Puglisi concurred. “There’s still a longer time with their contracting process, which we try to help with by using our standard agreement. But sometimes even if you go to contract and don’t make the date of signature, you can lose the date. You can lose the space. There’s that much demand right now.”

The combined volume play – fact or fiction?

While some companies have been able to leverage their business transient and meetings volume together at hotels for the sake of negotiations, one travel management company representative said hotels by and large today are not enthusiastic about that approach. “We can confirm that,” Vilovic said.

One reason behind that has to do with the type of rate traditionally extended to transient versus groups and meetings and some commercial structures often in play behind the scenes. Transient rates tend to be net, while meetings lean toward commissionable rates. That largely has to do with how meetings agencies take their fees from hotel room commissions, and that’s hard to untangle from the rate negotiation. Though some corporate clients are able to do it – in many cases, they are bigger players – and even those choose target markets for such a strategy.

“We want hotels to understand that a McDonald’s dollar is the same in our eyes whether it is business travel or group. We’ve demonstrated that we are dependable and reliable. We deliver what we promise”

McDonald’s’ Josh Rice

McDonald’s global meetings manager Josh Rice told the audience at a recent BTN Strategic Meetings Summit that while the company’s meetings and business travel groups operate separately within the organisation, the hotel sourcing practice functions in lockstep.  

“We do all our hotel reviews together. And there are times when a hotel will say, ‘We don’t want your group, just the business travel,’” Rice said. “But we want hotels to understand that a McDonald’s dollar is the same in our eyes whether it is business travel or group. We’ve demonstrated that we are dependable and reliable. We deliver what we promise.”

Aon, which is just now gathering combined travel and meetings data, plans to take the same approach. Global meetings director Jennifer Kowal said the company plans to “strengthen our partnerships in key markets” and is starting down this road with a property that is connected to the Aon headquarters. “I can let you know in a couple months how it goes,” she said, “but [travel and meetings] do have our conversations together with hotels, and we are looking at the total spend – like Josh said, the dollar is the dollar.”

De Gaspe Beaubien thinks many companies will be fighting an uphill battle on this front, noting some hotels actually are becoming a “little more bold,” eschewing RFPs –particularly for smaller meetings – and requiring corporates to book through a Groups360-configured portal that lives on their websites. This increases margins for hotel companies since Groups360 is backed by a consortium of major hotel companies, thus reducing the fees they would pay to global distribution systems or other marketplaces and RFP service providers like Cvent. “It’s something to keep an eye on,” she said.