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Follow our step-by-step guide to starting your 2009 hotel procurement process

YOU may have just have finished wrapping up your 2008 hotel programme, but the current economic environment will impact the 2009 hotel procurement process. Demand remains high and supply limited. Hotel rates are expected to continue to climb, especially in key business markets with low inventory levels. New hotel construction is not expected to effectively impact supply levels in 2009, and your traditional negotiation methods may no longer yield the same level of savings.
“Over the past two years, the complexity of the RFP process has increased,” says Hayley Housden, senior director of Advito, the consulting arm of BCD Travel.
“Making matters worse, today’s high-demand market increases the likelihood of bids being declined by suppliers – a situation that calls for sophisticated negotiation strategies.
“More than ever, knowledge is leverage. Maintaining solid hotel data, understanding your travel patterns and strengthening the ability to shift volume increases your ability to effectively negotiate and manage your programme. Yet, obtaining complete and accurate data can be a challenge.”
Get a head start in preparing for 2009 negotiations by following the advice from Housden.

STEP 1: Assess your current programme by consolidating available data, analysing your historical travel inform-ation, hotel volumes and compliance over the past 12 months (or a period of time that reflects your true travel patterns). Assess your current contracts; identify your current stay patterns, coverage and overlap to help identify which set of hotels work best for you. Take into consid-eration market conditions. You will be able to create a ‘baseline’ of your spend to judge the impact of future programme changes.

STEP 2: Define your hotel strategy, identify compatible suppliers and analyse potential changes in your travel policy/vendor selection if needed. Decide on any criteria required – wireless internet access and breakfast to be included, for example. Consider hotel industry pricing trends and any savings potential (ie from market tier/chain shift).

STEP 3: Prepare and distribute your hotel RFP. If the programme is going to be global you might want to select a project manager to communicate it to any multiple global partners or global travel committees your company has.

STEP 4: Once you have received all submitted hotel proposals, analyse them in detail and compare them against your baseline. This will help you identify areas for proposal improvement and construct business cases to submit as counter-offers to the hotels. If you had a pre-set criteria categorise them according to the agreed priorities. As each new negotiated offer is received, re-evaluate. Consider spend/savings comparisons compared to historical (year over year data).

STEP 5: Make your final hotel selections. Consider forecasted room nights and spend per selected property and any savings impact.

STEP 6: Contact preferred suppliers with rate loading information and deadlines. Timely implementation of contracted rates is central to realising cost savings. Audit hotel rates and monitor availability/accuracy of hotel pricing throughout the contract term.

STEP 7: Keep your programme on track. Measuring and tracking reports provide the ability to identify and document ongoing savings and contract compliance, address performance issues, and uncover additional savings opportunities.

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