CWT urges companies to offer hotels not only their regular transient business travel spend but as much of their meetings and events business as they can muster too. This is especially important now because many of those companies are booking fewer room nights than they did pre-pandemic. “As travel buyers find themselves with less volume to offer for negotiating power they are repeatedly seeking to weave in M&E volume as compensation,” says CWT.
HRS goes even further in suggesting additional types of spend to throw into the negotiating pot, including long-stay bookings, day use of hotels and “bleisure” – employees tacking nights on to their business trip for leisure purposes. According to HRS, “Converging all lodging spend can deliver savings of up to 16 per cent on bundled programmes.”
The logic of integrating spend sounds compelling, and has been advocated for many years, but does it work? Not necessarily, according to independent consultant Kevin Iwamoto, whose career has included spells as a travel manager and as a strategic meetings management professional. “In theory, any time you can combine volume you can negotiate something better. In practice it’s far more challenging.”
Another sceptic is Meenaz Diamond, senior vice president for M&E, airlines and marketing at the Accor hotel group. Asked how she responds to corporate clients suggesting a combined negotiation, she says: “Show me the data and show me the predictability. Let’s have a conversation and look at it. I wouldn’t say no straight away but my instinct would be to say no because I know all of the issues that are involved in meetings and events compared to business travel.”
Diamond has several reasons for believing travel and meetings need to be handled separately. First, there is the question of data. Corporate clients tend to have good visibility of their transient spend; of their meetings spend rather less so.
Then there is the difficulty of setting an appropriate blanket discount in advance for meetings in the same way as for transient. That does not work well for either the buyer or the seller, Diamond believes. For the buyer, each meeting is different, thereby requiring a longer conversation.
“Anything beyond a repetitive 10 to 15-person training kind of meeting has additional bells and whistles attached to it,” she says. “They might be small bells and whistles but they are there. You need food and beverage, audio-visual and so on. It’s more of an investment in many ways, so the terms and conditions are different.”
And the promise of additional business does not necessarily help the hotel supplier either. “Companies have a tough time understanding that ‘Well, I’m giving you lots of business, I need a better rate,’ doesn’t always work,” Diamond says. “Actually, it may not fit the composition of business those hotels are looking for.”
Like Diamond, Iwamoto also identifies lack of comprehensive data on meetings spend as a culprit, a challenge linked to travel typically having one owner within an organisation but meetings having several. A survey by HRS found that only 25 per cent of travel managers say their team has ownership of meetings management.
An integrated negotiation only has a chance of succeeding, in Iwamoto’s view, if those responsible for the two categories work together. Can vendors smell disunity? “I pity the buyer who doesn’t realise how astute suppliers are,” Iwamoto says. “The suppliers will recognise that right away.”
The internal corporate coalition has got to get its strategy and processes aligned before it sits down with suppliers or even sends out a combined RFP
Such is the case for the prosecution against integrated negotiations. But the defence also presents a robust argument. “I would say about 60 per cent of the time we are in negotiations with hotels with events as part of the negotiation,” says Pat Batra, executive director for travel, expense and fleet at Olympus Corporation.
“From my vantage this is a total spend. Hotel chains claim there are different requirements and you need different skill sets, and the needs of the customers are different. I get it, but it’s all coming into the same property. You could add another 5-10 per cent to your overall savings on your global spend if meetings and travel are integrated.”
Circumstances are, Batra admits, especially propitious for his company to integrate. Olympus has a very close relationship with one particular hotel chain. But this is by no means uncommon.
Hyatt EMEA vice president for revenue, sales and distribution Paul Dalgleish says his chain has a global enterprise programme for 47 major clients which gives each of them a discount on the totality of their spend. Average combined spend with Hyatt by its global enterprise customers is six times higher than that of its regular corporate clients. “This is a growing area that we want to expand, and to work with the right customers to get their people into our hotel,” he says.
Client spend rolled up by Hyatt includes not only transient travel but meetings, extended stay and even the holidays of clients’ employees. Dalgleish is confident the latter can be tracked and assigned satisfactorily, and can amount to a significant sum in the case of companies with ten or even hundreds of thousands of employees.
If travel buyers want to pursue the integrated option, they need to start a data hunt and form an internal coalition with whoever has responsibility with the procurement team for meetings, according to Iwamoto. Key to making that coalition successful, he says, is “trusting each other to ensure their specific needs are met. You don’t want to get into a competition of ‘My spend is larger than yours, so I should have more say in the supplier selection’. Whatever the differences or variances may be, the internal corporate coalition has got to get its strategy and processes aligned before it sits down with suppliers or even sends out a combined RFP.”
Meanwhile, Batra urges flexibility by buyers not always to hold the supplier to the agreement. “Sometime you have to understand that a certain supplier may not be profitable. In some cases we have accepted changes to a contract because the hotel was so small that it was struggling,” he says. “We want to come back next quarter or next year and we want to make sure that it’s a healthy relationship. You have to be fair to suppliers.”
Batra adds that buyers must extend the same flexibility to their internal customers. Sometimes the contracted hotel supplier in question may not have appropriate accommodation for the needs of a particular meeting.
That’s why, says Diamond, if an integrated approach is going to succeed, clients need to present suppliers not only with historical spend data but a forward schedule of quarterly meetings, annual conferences, sales training and other expected events. “Show us what the planning is,” she says. “It doesn’t have to be set in stone. We know things change. But it’s about transparency – having that sensible conversation.”
Even with her wariness based on lengthy experience of integrated negotiations, therefore, Diamond adds: “It’s not to say that it’s not possible. But it’s a dialogue. It’s much more nuanced and it’s not just about sending out an RFP and saying ‘Respond in ten days, here are the terms and conditions, take or leave it’.”
Last time: Hotel RFPs – The negotiating outlook for 2024 rates, poll result.
