Most meeting planners are strengthening their negotiating position through consolidation of their meetings expenditures, and consultants and hoteliers report that an increasing number of planners also are lumping in transient and incentive spending to add negotiating leverage.
A MeetingNews survey of 220 meeting planners showed 55 percent either already are consolidating meeting expenditures as a negotiating strategy or plan to do so within the next year. The practice is much more widespread among corporations and associations that spend more than $1 million on meetings annually, with 63 percent of that subset using the tactic.
Consolidation is occurring as many of the United States' largest corporate travel spenders centralize control of meetings expenditures. Lockheed Martin, for example, has consolidated meetings management for the past few years with the help of StarCite and HelmsBriscoe, while Northrop Grumman in recent years added a payment tool specific to its meetings program.
Similarly, Cisco Systems recently has embarked on a complete globalization of its meetings program. The company is aligning teams, getting vendor agreements in place and rolling out an American Express meeting card, said Carolyn Pund, Cisco senior manager for meetings and events.
The effort required collaboration between Cisco's travel/finance and events/marketing teams. "This economy has driven everybody to do cost savings, so while we've been pushing it at Cisco, it's come even more to the forefront," Pund said. "It was many months and a lot of collaboration, but today, the travel team is one of our strongest allies and partners."
Deutsche Bank, too, is in the midst of a two-year reengineering of its $150 million global meetings and events program. In 2007, the financial services company began to link its fragmented meeting planning and procurement operations and worked with StarCite to develop processes for centralized meetings management, including its request for proposals for group travel.
Companies increasingly are looking to further leverage savings by consolidating transient and group travel volume into a single negotiation. The MeetingNews survey showed that a little more than one-third of meeting planner respondents combined meetings and transient volumes, mostly for hotel but also for air.
Starwood Hotels & Resorts Worldwide senior vice president of global sales Christie Hicks said she is seeing more requests for consolidated transient and group negotiations. "It's when they roll up to a single place or a person that we see the request for true consolidation," Hicks said. "We have a lot of requests for similar pricing, but we are seeing a little more of strategically aligning for share shift."
Elaine Kennedy, vice president of demand sales for Utell Hotels & Resorts, the hotel representation unit of Pegasus Solutions, said she also is seeing an uptick in combined transient and group negotiations. Like Hicks, she attributed it to the increasing convergence of the two activities within companies.
"In previous years, a lot of travel managers had never really wrapped their arms around where the meeting business was being booked," Kennedy said. "Now it's being reined in, and they're getting offered tools to make the meetings buying process easier."
Hotels are trying to take advantage of that consolidation too, she said. If a property hosts a large conference or business event for a corporation, it seeks consideration for its transient program as well, she said.
Even in companies that have brought together the two under a single management source, negotiating transient and group together is not always ideal, said Bob Brindley, vice president of BCD Travel consulting arm Advito. "If you have the data, it's always a good idea to analyze it and consider it, especially if there's enough group business that repeats and could be packaged with the transient business," he said.
Hotels had resisted combined negotiations in travel's booming years but are much more likely to agree to them during a buyer's market, he said. "In the past, it was difficult to negotiate, because if you needed 200 rooms, you weren't always going to be able to lock in that many at a transient rate," he said. "Now,with occupancy down, hotels will at least consider it."
Hoteliers also report an increase in buyers looking to consolidate group and incentive travel. For example, top sellers might be given room upgrades or special amenities during a sales meeting rather than being awarded a separate incentive trip. Unlike the meeting and transient travel consolidations, however, this sort of tactic is likely to fade as the economy recovers, said Jamie Bruce, senior vice president of sales at international resort operator and developer Kerzner International.
"It's becoming a more common way to reward their folks, as opposed to canceling meetings," Bruce said. "It's a reluctant necessity and certainly not something that meets the benefit that focused incentive campaigns have and eventually will come back to."
Starwood's Hicks said much of that came from a problem of perception rather than a targeted strategy for cost savings. Combining group and incentive travel is a way to dip a toe into the water before bringing back incentives in full force, she said.
"People want to have the ability to create individual types of rewards and incentives," Hicks said. "Within a company function, particularly if it's at a destination location, they might bring in their spouse and family and enjoy a little time before or after the event."
Originally published Oct. 19, 2009