When you negotiate your annual Hotel Sourcing Program, have you wondered if your Meetings spend can be incorporated in the process? Read this whitepaper.
2. Table of Contents
Why Read This White Paper? …………………………………………………................................................ 2
Different Categories; Similar Cost Pressures …………………………………………………………………... 2
Six Phases for Success ……………………………………………………………………………………………. 3
Realizing the Benefits ……………………………………….……………………………………………………… 6
Our Recommendations …………………………………………………………………………………………….. 7
About BottomLine Group/For Further Information ………………………………………………………………. 7
3. Why Read This White Paper?
Some North American companies are already merging
their transient and meetings sourcing – and doing so with
great success. Is yours? A recent survey by Kevin
Iwamoto uncovered that approximately 70% of participants
were “planning to combine both buckets of spend to
improve their positions on increasingly tougher
negotiations with hotel suppliers.” Don’t be left behind.
Terms for small to midsize meetings can also be pre-
negotiated during the sourcing process. This can be a
time-saving benefit for companies. Sourcing transient and
meetings together can also improve relationships by
elevating the conversation to one that focuses on the total
opportunity versus just a portion of it. Read on to learn
more about the benefits offered by this strategy, and the
steps to get started on this consolidation journey, as
brought to life in a six-phased approach developed by
BottomLine Group (BLG).
Different Categories; Similar
Cost Pressures
Let’s begin by taking a look at these two categories.
Transient: Travel managers often hunt for new and
innovative ways to secure savings that can be attributed to
their transient programs. The U.S. in particular has
experienced a supplier’s market for the past few years,
and rate increases are often the norm, so it can be
challenging to deliver year-over-year savings. As a result,
companies look for creative cost-cutting approaches, such
as experimenting with a lower tier hotel, negotiating critical
complimentary amenities, or even exploring the benefits of
conducting reverse auctions in key markets. A well-
managed transient program is one that can adapt, and has
the resolve to leverage new technologies and trends in the
marketplace.
Meetings/Group: The meetings industry is maturing.
There is a lot of buzz around Strategic Meetings
Management (SMM), and many companies are dedicating
time and resources to roll out initiatives in support of this
strategy. The size of this expense category is capturing
the attention of the executive level within companies. A
study by the U.S. Travel Association (The Role of
Business Travel in the U.S. Economic Recovery) found
that of the $225 billion U.S. domestic travel industry, 57%
was for general business travel, and the remaining 43%
was attributed to meetings and conventions. In terms of
cost pressures, an Aberdeen study revealed that 73% of
companies want to reduce their meetings spend through
better cost management.
There is need and desire to find the synergy and transform
the management of these two categories. Merging
transient and meetings sourcing can reveal hidden
opportunities for companies to experience incremental
benefits.
Finding the Synergy
Historically, differing characteristics have defined the
sourcing and negotiating of transient versus meetings
contracts. These differences are depicted below, as well
as the synergy that exists between these two spend
categories:
The key message? Leverage the natural synergy.
Often, the same travelers are involved, and there are
shared goals among the collaborative teams in charge of
these spend categories.
COMPANIES THAT EMPLOY A STRATEGY TO
MERGE TRANSIENT AND MEETINGS SOURCING
WILL HAVE MORE VOLUME TO LEVERAGE WITH
SUPPLIERS, RESULTING IN THE POTENTIAL FOR
GREATER SAVINGS.
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4. For companies not already running a consolidated
sourcing effort, BLG recommends that they proactively
leverage these spend categories to realize the benefits.
Aberdeen’s 2014 Strategic Meetings Management Survey
found that 67% of best-in-class companies find their cost
savings in the areas of “effective sourcing techniques and
effective supplier negotiations.” The study also reported
that best-in-class companies focus efforts on improving
their “ability to have visibility and see where spend goes
across the vendor landscape.” BLG challenges companies
to invigorate the sourcing process by implementing a
strategy to successfully merge these two spend
categories.
Six Phases for Success
BLG’s six-phased sourcing process can help companies,
like yours, navigate through this merging effort. Many
companies may desire to integrate their meetings spend
into the transient sourcing process, but are not sure where
to start. Travel Managers often find this task daunting due
to gaps in meetings spend reporting or due to lack of
resources. They are simply not clear on how to identify the
overlap and ultimately how to leverage this consolidated
spend. The phases below can guide these companies, and
yours, through their consolidation journey.
1. PLAN
When mapping out the framework for a consolidated
sourcing program, a company should determine the overall
goals and objectives that will drive the project. Key
questions to consider are:
What does success look like? Consider the
perspectives of leadership, travelers, and other
stakeholders. How would each of these stakeholder
groups define success?
What is new this year (e.g. new office locations,
important changes in volume, new leadership
directives impacting travel, new team members, etc.)?
Was last year’s program and process successful?
Spend some time reflecting on what worked and what
did not, and what could be different or should stay the
same in the coming year.
Answers to these questions can assist a company in
defining their path forward. Objectives for a consolidated
meetings and transient program could look like this:
To identify 20 overlapping meetings and transient
markets
To reduce rates in these key markets by 3% driven by
the total opportunity of meetings and transient spend
To secure complimentary internet and breakfast for
every hotel selected as preferred in these key markets
To lock in standard terms and conditions that will
govern small to midsize meetings
The planning phase also encompasses building out the
project plan and establishing a team governance model to
drive the project. Key action steps that address the
meetings side should be included in the typical project plan
of a transient program. It is important to think of these
items at the onset so that the project runs seamlessly and
steps are not overlooked. Remember to include critical
meetings related tasks in the project plan, such as:
MANY COMPANIES USE THE SAME HOTELS
(AND AIRLINES) FOR BOTH THEIR TRANSIENT
AND MEETINGS BUSINESS.
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5. 2. ASSESS
Spend associated with meetings can be assessed along
with the transient data to understand volume and
projections for the upcoming year. Consider the synergy
created by bringing all data sources together to conduct
one analysis, versus spending the time on two separate
analyses. Tips for this assessment phase include:
Common sources to gauge meeting spend can
include expense reports, meeting cards, and
supplier data
Within the consolidation of travel and credit card
reports, one can look for key meetings indicators
such as spend in popular meetings destinations
(Fort Lauderdale, Las Vegas, Orlando, etc.) and
unusually high average rates that would signify
meetings volume
Companies should look for overlap to uncover the
top cities that are used for both transient and
meetings spend (Note: some hotels can
accommodate both the needs of transient and
meetings, and others cannot)
A proper analysis is integral to the process and this
upfront assessment is the cornerstone of any hotel
program. It is one of the sustaining elements that is
referred to throughout a project and beyond. If there
are questions about spend in a hotel, city, region, or
even chain, the answer can be found in this initial
assessment phase.
3. STRATEGIZE
The program goals and assessment findings will help drive
the strategy. Companies can unleash their full savings
potential by adopting a 360-degree view to strategically
source the hotel category. This information can be used to
formulate the overall Request for Proposal (RFP)
approach. Seven strategic levers to consider are outlined
below:
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6. Incorporating meetings spend in the transient sourcing
process is an ideal strategy to effectively leverage the
buying power of combined spend. Meetings contracts are
typically negotiated on an event by event basis, but there
are components that can be negotiated in advance to
reduce the individual sourcing efforts. Companies should
identify key criteria and include these components during
the RFP process. Companies can also leverage their
meetings spend in their chain strategy. If the top chains
used for meetings align with the top chains used for
transient travel, there may be room to improve the
specifications of the chain agreements and improve the
benefits for both parties.
4. EXECUTE
There is much synergy in the execution of a consolidated
program. Consider these execution approaches:
The Meetings Module of the Global Business Travel
Association (GBTA) RFP form can be used to collect
standard meetings pricing information. This module
also includes 30 user-defined questions that can be
customized per client. It is important for companies
to think about what data will be useful and how this
data will be beneficial to the decision-making
process.
Companies can communicate their combined
transient and meetings goals in their cover letter
when distributing an RFP. If there are top markets
that overlap for both meetings and transient, itemize
these in the RFP communication so that suppliers
know where the combined approach will be focused.
The availability and proper analysis of robust
benchmarking data can lead to a successful
negotiation effort. Solid recommendations are
developed by taking market conditions into
consideration and comparing hotel offers to year over
year and peer benchmarks. A strong negotiator
armed with proper content will be respected by
suppliers, and will aim to deliver on the goals and
objectives driving the project.
The review of bid responses and hotel attributes will
reveal the hotels that will effectively serve the needs
of both transient and meetings stays.
Negotiating key concessions proactively will save
time for sourcing managers down the road.
5. IMPLEMENT
The implementation phase brings a consolidated hotel
program to life. Implementation includes activities to:
Notify the preferred suppliers
Quantify savings/cost avoidance
Communicate rate-loading information
Conduct rate audits
Set up relevant online booking and hotel directory
tools and processes
Strategic Levers
Demand Specifications: Assess and capitalize on traveler needs – including needs driven by policy – with a view to boost
opportunity for savings
Buying Power: Fully leverage corporate spend via an appropriate mix of right-sizing the program, marketing the
opportunity arising from adjacent spend categories (such as meetings), and restructuring supplier partnerships
Price Evaluation: Assess competitive bids leveraging important benchmarking metrics (market drivers including
economic indicators, hotel supply and demand and rates available to other clients) considering both rate as well as non-
price factors that are all too commonly ignored
Process Improvement: Realize process efficiencies that are deemed to have an immediate and lasting value
Rate Authentication: Benefit from sourced rates with ongoing, regular, and surprise rate and rogue spending audits
Spend Transparency: Increase the percentage of spend going through preferred booking channels
Spend Under Contract: Increase the percentage of spend channeled to preferred partners
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7. Communication at this phase is critical to the success of
the program. Companies must ensure that all information
is accurate (i.e. rate-loading instructions, final rates,
amenity and VAT inclusion), and that all stakeholders are
notified (i.e. Hotel National Account Managers, individual
hotel contacts, travel management/meetings company
representatives, internal employees and leaders).
6. OPTIMIZE
Once a hotel program is communicated and negotiated,
there is still valuable work to be done to sustain it. A
program needs to have the flexibility to be altered to
accommodate changing business requirements. For
example, new markets may surface resulting in the
addition of a new preferred hotel or negative traveler
feedback regarding an existing preferred property may
lead to a change in suppliers. Other optimization efforts
can include:
Monitoring reporting to uncover new trends so the
program continues to align with traveler needs and
business requirements
Communicating program benefits frequently. Internal
meetings with key stakeholders can address what is
working well, what is not working well and what key
changes should be implemented
Conducting supplier meetings to review transient and
meetings reporting and discuss successes and
challenges
Tracking compliance to the preferred properties and to
the negotiated rates. If travelers or meeting arrangers
are not selecting the preferred hotels, it is important to
understand the reasons so that appropriate changes
can be made
Realizing the Benefits
Merging transient and meetings sourcing can deliver many
benefits to companies. Consider these positive outcomes:
Greater leverage and negotiation power can be
achieved by taking a holistic approach and presenting
consolidated spend to suppliers. Companies with
visibility of their consolidated spend can speak to the
totality of their business when presenting opportunities
to suppliers. Other companies may have a limited
view of their meetings spend, but they can still surmise
some meaningful trends to leverage from the data that
is available to them. Going forward, companies can
consider implementing steps to improve tracking of
their meetings spend so that this increased visibility
leads to greater positioning with the supplier base.
Increased savings through rate reductions can result
by presenting additional volume to the suppliers.
Typically, hotels will reward high-producing customers
with lower room rates. Incremental savings can result
for both the transient and meetings programs.
According to Aberdeen Group (May 2014), the top
reported pressure for Strategic Meetings Management
is “the need to reduce cost and improve savings on
meetings and event spend (73% of all respondents).”
Time savings through process reduction can result
from sourcing transient and meetings categories
together. For example, where there is overlap,
conversations with hotels can include discussions
about both transient and meetings, instead of tackling
these independently. Additionally, consider the time
saved for managers in charge of sourcing small to
midsize meetings when they already have standard
terms and conditions pre-negotiated as a result of the
consolidated sourcing effort.
Strengthened relationships may result as well. It is
important to maintain strong relationships so it’s
easier to do business in the long run. Hoteliers
typically aim to achieve a bigger “piece of the pie”,
and consistently ask about a company’s meetings
objectives when working on the transient program.
National Account Managers with some hotel
suppliers have the responsibility and oversight for
both transient and meetings spend, and can be
helpful allies in sourcing these categories together.
PRESENTING A UNITED FRONT THROUGH A
CONSOLIDATED SOURCING EFFORT MAY ASSIST
IN ALLEVIATING THIS PRESSURE BY ACHIEVING
KEY SAVINGS GOALS.
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8. Our Recommendations
A GBTA report in May 2015 revealed that “two in five
buyers and meetings or event planners now work for
companies with formal meetings management programs.”
This growing trend provides good reason to believe that
volume data for meetings is more readily available.
If this data is now available, the question becomes: why
not leverage it for the greatest benefit?
Integrating transient and meetings sourcing is a natural,
beneficial next step. The process could seem daunting,
but it can be easy with experienced guidance and support.
In summary, BLG recommends that companies:
Follow the six-phased approach: plan, assess,
strategize, execute, implement and optimize
Find the synergy – use it to strengthen your
company’s position in the sourcing process
Foster an environment that can deliver win-win
benefits for both buyers and suppliers
Leveraging a strategy to merge transient and meetings
sourcing could improve negotiation power, build
relationships and increase savings. Why wouldn’t your
company do it?
About BottomLine Group
BottomLine Group (BLG) is a leading management
consultancy providing tailored strategies and
solutions to clients across North America. We are
trusted for having expertise in the Travel, Financial,
Professional Services industries, as well as in the
Public and Private sectors. Our team provides a suite
of services that achieve bottom-line results.
For more information on merging transient and
meetings sourcing, obtaining material for internal
presentations, or for help elevating the success of
your Travel Program, please contact:
Al Norman, Director, BottomLine Group
Al.Norman@bottomlineconsulting.com
Website: bottomlineconsulting.com
LinkedIn: linkedin.com/company/bottomline-group
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