The hotel rate landscape continues to shift, complicating the process of requesting proposals for lodging programs
by: Harvey Chipkin
As of July 14, the Sabre hotel RFP service was no more. The company was “sunsetting” the tool, according to its website, because it is not core to its hospitality business and will allow for more resources to be devoted to other products. Is the end of Sabre RFP a significant event in itself or a reflection of the ongoing evolution of the hotel RFP process? Suppliers and analysts agree that the process is undergoing sizeable upheaval, but how it is changing is a matter more in dispute.
At Cvent, the meetings technology provider, Brian Sullivan, vice president, product management, says it wasn’t a shock that a legacy player might opt out of the marketplace because it takes “meaningful investment” to implement an efficient RFP process. Cvent’s RFP solution is Cvent Travel (providing tools and insights for travel managers to source bids from hotels, negotiate contracts, and benchmark and audit their programs), and Cvent Transient (helps hotels and venues attract corporate RFPS).
Some think Sabre’s move might lead to more innovation and an improved process. Greeley Koch, managing director of 490 Consulting, says Sabre’s exit “presents an opportunity for the market to explore alternatives and assess whether there are better options available.”
David Mollov, executive vice president, hotel solutions for Tripbam, the shopping and analytics provider, says his customers are “excited about all the innovation and are contemplating ditching the traditional approach and moving towards a comprehensive, streamlined approach that’s more data driven.”
A number of trends have emerged around RFPs, according to Sullivan, including negotiating fixed rates with a “float” providing perhaps a fixed rate and a dynamic discount with the same property at the same time. Other approaches involve AI-assisted and analytic-based recommendations that reduce the need for back-and-forth negotiations, or pre-populating static information with platforms automatically displaying basic hotel information (restaurant, fitness center, etc.) so travel managers don’t need to ask about it in their RFPs.
Other sourcing providers have emerged or become more prominent, including Vindow, a cloud-based travel platform that provides RFP sourcing, contracting and data intelligence. Vic Pynn, CEO, says new technologies are enabling sourcing capabilities that were not possible before – like easily negotiating dynamic rates based on seasonality and travel patterns into an RFP – making it feasible to request and receive more market responsive rate options, rather than a single annual rate.
The overriding solution from the company’s point of view, says Pynn, is transparency (the company name itself, Vindow, derives from “virtual window.”) Buyers are provided a Vindow Score, which uses “natural language sentiment analysis” to scour the Internet for honest hotel ratings. For hotels, Vindow offers Bid Intelligence, a paid feature where hotels can instantly see how their bid ranks against their competition when weighted by both rate and concessions, and allows them to instantly improve their offer, if they want to.
For travel managers, Pynn says the company offers affordable subscriptions that provide access to the Vindow sourcing platform with the transparency, flexibility and detailed information they need to make informed decisions.
Another emerging player in the RFP game is BTP Automation, founded in 2020. Annette Cumming, chief revenue officer, says that typically once a company uses sourcing technology, they rarely go back to a manual process. She says her associates have been meeting with many Sabre RFP customers in recent months “and appreciate the opportunity this provides us.”
Altered States The traditional RFP cycle has “certainly” been altered, says Cara Banasch, vice president of sales at Omni Hotels and Resorts. Now, buyers are not tied to the same “season” that was typical of all business travel negotiations – starting in summer and ending in fall. There is still flexibility if a particular market is not performing as expected, and everyone is open to modifications or mid-season adjustments.
At HRS, the hotel booking portal, Pauline Robin, vice president procurement consulting and supplier relations, Americas, notes that the big shift is “both sides have become more strategic.” Simply negotiating more frequently does not make much difference, she cautions. More important is to ask: What is the client’s objective? Using its “5 S” approach – savings, safety, security, sustainability and security – HRS aims to place the appropriate amount of weight on each “S” to come up with the ideal answer to that question.
There is still an annual pricing process, agrees Tammy Routh, senior vice president-global sales for Marriott International, but with more continuous sourcing through the year. Rates are not renegotiated but there might be a need to add hotels based on production – or underperformance. Also growing, says Routh, is a hybrid approach – clients negotiating a static rate for the top 20 percent of their business while moving to a dynamic pricing model for the rest of the business with agreed-upon discounts.
Bespoke plans are becoming increasingly important, Routh notes, particularly with project work creating a need to ask questions like: Will the traveler go back to the hotel every week? Will they stay some weekends? Do we need to provide a leisure offer?
In similar fashion, according to David Krauthamer, group vice president, global sales for Wyndham Hotels & Resorts, with the influx of RFPs that uniquely fall into the infrastructure and special projects categories, Wyndham is poised to deliver on that demand with its longtime focus in serving small and mid-size businesses and “everyday business travelers with boots and hard hats.”
A Return to ‘Normalcy?’ Meanwhile, there are many who believe there has been more of a return to RFP “normalcy” – to a point. Neil Hammond, a partner with Goldspring Consulting, says that after a few years of pandemic-driven rollovers, RFP’s have returned to a more normal process for 2023 with expectations for the same in 2024, but with better data for both sides to work with. Lora Ellis, principal, buyer consulting-travel for Festive Road, says, “For the most part it’s still quite traditional. However automated continuous sourcing is starting to change the approach. There is willingness and desire to do it differently, with some buyers looking for external support to help them take a step back and re-think their approach.”
The process itself has remained relatively unchanged, says Andy Herman, senior manager, RoomIt Solutions. When sourcing 2023 programs, he explains, the company did find that multiple rounds of negotiations were needed due to significant rate increases and the end of rollovers. There is also an understanding now, he says, that not all hotels will be identified and negotiated during the historic “RFP season.”
Nothing has fundamentally changed, says Christiane Cabot Bini, executive director, corporate sales for Hilton, adding, “I don’t think the current RFP season will cause any seismic shifts in the market.” In the short term, she notes, a few legacy tools have left the market, but newer tools are appearing and gaining traction. The majority of customers, says Cabot Bini, don’t use third-party tools in any case because of the benefits of dynamic pricing.
Frequency Yields Streamlining One continuing change in the RFP process is the frequency, which has led to a streamlining of RFP content. Corporations, says Koch, have started shifting their RFP cycles to different times of the year, implementing more frequent updates to their preferred hotel lists to accommodate the dynamic travel landscape, and striving for simplicity and efficiency.
As for RFP forms themselves, Mollov says they are more streamlined because “we’ve all realized that you don’t need five fields in a form dedicated to how many fire sprinklers are at the property. There’s just a lot of waste in the existing forms that eat up time.”
Similarly, Robin says RFP forms are more streamlined because they have been stripped down to “what we really need to know.” And the popular Global Business Travel Association format, which is extensive, says Herman, continues to be used but respective parties may place more weight on key questions when making decisions.
Beyond the Process While it still seems to be a seller’s market – with some softening in pricing – other factors are carrying more weight at the negotiating table, including customer satisfaction but with the rapid advance of sustainability as a core element. And factors like those typify a general recognition that shared interests are increasingly key to successful negotiations. Omni is invested in business travel for the long term, says Banasch, “so there is no mindset of a buyers’ market or a sellers’ market in our bids and negotiations.” She says the company is interested in “a relationship that benefits both parties over multiple cycles with a view to business objectives that assist everyone in achieving their goals.”
Wyndham, Krauthamer says, is doubling down on building relationships with key players to capture business for its franchisees, making sure its hotels are loaded into TMCs’ systems for consideration and proactively staying top-of-mind with accounts for any RFPs they may now handle directly.
Meredith Smith, principal, buyer consulting – M&E for Festive Road, says the company is guiding clients on “mutually beneficial outcomes vs a supplier/buyer relationship, and that approach is going a long way. “
But it’s sustainability that appears to be is taking up substantially more RFP space. “We went from talking sustainability with some customers,” says Routh, “to talking about it with all customers.” While it’s hard to incorporate issues like sustainability into RFP’s, says Routh, “we have to figure out a way to align our customers’ goals with our own.”
According to Cvent’s 2023 Travel Managers Report, 25 percent of travel managers say sustainability programs influence their decision to submit an RFP. Reducing costs and flexible prices will always be table stakes, says Sullivan, but travel planners across the board are looking to sustainability as a necessary feature when sourcing.
An NDC for RFPs? Is there a New Distribution Capability-type automation on the horizon for hotel RFP’s? Even though it may not take exactly that form, nevertheless, automation and technologies like AI will certainly reshape the landscape dramatically. Pynn believes that emerging technologies, especially AI, have the potential to revolutionize how hotels are currently being sourced in a way similar to what is happening in the airline industry.
Cabot Bini says when she thinks of the long term, she is optimistic about the emerging technologies in areas like AI. These advancements, she notes, “are going to have a profound impact on business travel.”
And Robin agrees that a new distribution landscape like NDC might lie in the future, noting that HRS already has direct connections with major hotel chains.
It’s possible that the entire hotel distribution system – including RFPs – will undergo a technology-driven overhaul in the near future. But keep in mind that through business cycles, a pandemic and other uncertainties, the traditional RFP process has proven to be a stubbornly change-resistant constant.