Ask parties on both sides of the negotiating table what they think about the annual hotel RFP season, and more often
than not, they’ll say it’s an inef;cient,
outdated process. But that doesn’t mean
everyone’s ready to change it.
A recent GBTA study of 161 travel
OK, WHY IS THE INDUSTRY STUCK?
managers found 66 percent were satis-
;ed with the RFP process. While sat-
isfaction may seem like a good thing,
satis;ed people don’t see a reason to in-
novate. And innovation is exactly what
many say the industry needs. “I’ve been
in the travel industry for a little over
20 years, and it feels like we talk about
the same issues for decades,” said Yapta
CEO James Filsinger. “We are continu-
ing to rely on systems and processes
that have been in place for decades that
worked effectively and ef;ciently 20 or
30 years ago. We have not brought or
adopted innovation into the process.”
The BTN archives are ;lled with
prognostications of changes to the hotel
sourcing process—to be ushered in ei-
ther by shifting market conditions, new
technologies or bold strategies deployed
by a handful of powerful travel buyers.
Consider this declaration from then
Worldhotels Americas VP Tom Grif;ths
in May 2009, a time of high volatility
in the hotel pricing market: “The days
of issuing a simple, one-year request for
proposal in September that would be
accepted in October, loaded in Novem-
ber and available in January ... are gone.
Companies and hotels are going to be
looking at ways to maintain the great-
est degree in ;exibility, both in the way
of availability and pricing, even as the
market comes back. … The old days of
‘seasons’ is long gone. Every month will be a new season.”
Almost a decade later, though, the industry is still keeping largely to a season, only now it starts even
earlier. Despite new technologies that give companies greater visibility into their hotel data and the value of
their negotiated rates, the one-year contract of static rates is still king when it comes to hotel procurement.
While there’s a temptation to point ;ngers, many buyers and suppliers, some of whom declined to be
named for this story, don’t place blame with any one stakeholder.
The Buyer Side. If the same group of people complains about something but then 66 percent pro-
claim satisfaction, it’s not satisfaction. That’s resignation. “I learned a long time ago, from an old
boss of mine, that people or companies or programs change for two reasons: pain and urgency,” said
David McDonald, an independent global travel and procurement professional. “When you think
about the annual hotel RFP season, it’s not painful. That is, it’s painful because it’s work and it’s
lengthy and it’s tactical, but it’s not painful to the point that everyone hates it so much that they want
The near-constant turnover of the RFP cycle—gather data, send out bids, negotiate, negotiate again,
negotiate once more, sign a contract, check the rate loads, check the rate availability, start all over
again—means that smaller programs with limited resources have little time to dream up alternatives
on their own.
The rise of sourcing partners that can negotiate on behalf of travel buyers has alleviated some of the
pain of RFP season; according to the GBTA study, those who rely somewhat on a TMC for hotel negotiations report even higher levels of satisfaction, 75 percent. But by McDonald’s formula, removing
some of the pain consequently removes a trigger for change.
Some buyers, though, have managed to embrace newer solutions. Steven Schoen, Siemens director
of mobility services for the Americas, procured two-year agreements for about 75 percent of his hotels
last year. That means he’s already nearly ;nished as the 2018 RFP season approaches. Others—like
Unilever’s Yvonne Moya and Microsoft’s Eric Bailey, Marta Rodriguez Martinez and Julia Fidler—are
deploying proactive approaches to sourcing that put the desires of the travelers, rather than the suppliers, at the center of the decision-making process.
The Hotel Supply Side. The hotel industry is fragmented—far more so than the airline industry. Consider the limited power for change that Delta Airlines, for example, would have if each of its planes
were owned by any party other than Delta. In the hotel space, hundreds of companies each have a
growing number of brands, and those companies typically franchise to hundreds of thousands of private owners or ownership groups.
Major hotel companies have rolled out systems for managing revenue and on-property operations,
but hotel technology systems still lack uniformity from property to property. That means any creative
initiatives a buyer and salesperson dream up around pricing—say, a corporate dynamic rate discount
that has a built-in cap—may not be feasible to enact.
MGM Resorts International chief sales of;cer Michael Dominguez said the hotel industry needs to
change the way it does business. “We are so far behind the speed of change that we cannot keep up.
We say we’re innovative; but we’re innovative in product. We need to start being more innovative in
process.” Hotel owners, he added, likely will adapt if the larger hotel company really decides to make a
change. “When hotel companies want something, they get it done. You don’t have owners around the
country that want to pay marketing fees and all of the fees they pay for loyalty programs,” he said. They
do it because hotel brands require it.
The Data Problem. Hotel data is bad. Not just because it’s too often inaccurate but also because it’s
incomplete. And that lack of visibility not only can paralyze procurement professionals exploring alternatives but also can ensure that they continue in ineffectual pursuits out of habit.
Will Annual Hotel RFPs
BY JULIE SICKEL
Hotel RFP Models