Mr. Boult

Meetings & Conventions

RFP or Real-Time Booking? Where is the Cutoff for Meetings Automation?

By Michael Boult, President & CEO, StarCite, Inc.

Real-time, seamless, transactional booking is the future of small meetings. Unlike the transient side of hospitality and because of the inherent complexities associated with group business, the meetings industry has struggled to provide buyers and suppliers with frictionless booking capability. Changes are on the horizon, but we still remain in the infancy of booking meetings in real-time.

Real-Time booking for meetings is a concept that is new to both planners and sales managers. To gain acceptance, there are various psychological, technological and business practice barriers to overcome, similar to those that were crossed as the industry moved to adopt online RFPS for large meetings. Online RFP adoption is accelerating at an amazing rate, and now eRFPS and online lead management tools are considered standard protocol in the industry a little more than eight years since their inception. While eRFPs work well for larger and complex meetings, the process is far too cumbersome for millions of smaller meetings. A different solution is required to enhance the sourcing process and to create greater efficiency for both buyers and suppliers.

The natural place for real-time booking to start is with small meetings. In fact, on a very limited basis, real-time booking is already taking place. Savvy meeting planners have realized that they can bundle together blocks of transient rooms that are available to be searched and booked via the GDS. Searching the GDS for open blocks of rooms is how most of the new leisure focused online group sites are working. These sites are mostly targeted toward the sports teams, religious events or family reunion planners and can "knit" together an otherwise cumbersome user experience. As my mother might say, "cheap and cheerful" versus the alternatives currently on offer.

There are also several supplier led efforts. Hilton reported recently in Hotels Magazine that group bookings of 25 guestrooms or less represent about 60% of incoming group sales leads and that it has booked 800 meetings online with its online solution, e-Events. The company predicts that over 12,000 meetings will be booked using e-Events during 2008. Approximately 42 percent of the RFPs flowing through StarCite represent meetings of 50 total room nights. However, we know from our clients that the majority of their demand in this segment is still handled offline.

The increased electronic booking trend is highlighted by PhoCusWright in its "Groups and Meetings: Market Opportunity Redefined" report. "Smaller, simpler groups and meetings are on the rise in both the leisure and corporate segments. Because these tend to have fewer variables, they can be moved online with the entire business being transacted - from contract to bookings - without the need for a request for proposal." The report predicts that by 2008, the online penetration for groups and meetings will be 41% of all groups and meetings. 2008 is fast approaching and our level of activity has never been greater, but it is unlikely that this level of adoption for real-time booking for meetings can be reached for many years to come. It isn't the will that prevents this from becoming reality, it is the way of thinking that must change.

For hoteliers, any real-time meeting booking solution must work in conjunction with hotel revenue management systems to bring real net gain to the hotels and help execute effective distribution strategy. Each hotel has a finite amount of meeting space which is a valuable commodity that is used to leverage greater group room revenue. Hotels often describe a reluctance to pay typical commissions for third parties bringing this business to the table. This approach might be a case of "penny wise, pound foolish", given what was shared during a recent meeting with a global hotel brand. The head of sales acknowledged that the "analog" process currently employed by their on property sales team was calculated to cost $200 per enquiry and $1,200 for every actual meeting booked. For a typical meeting of 10 people, that cost represents a cost of sale of between 30%-40%!

Having been in the travel industry for more than two decades, I can attest to the growing focus on meetings within the corporate travel industry. As witnessed at the latest Annual Meetings of NBTA and ACTE, a convergence between the business travel and group markets is apparent. Many of the educational sessions at these conferences are now focusing on group meeting issues and how they relate to business travel. Meetings remain the last frontier of corporate indirect spend management. Continued tight availability of group meeting space and guest rooms in top tier cities, and another year of predicted average rate increases that will range between 6-8 percent will only continue to drive corporations to explore and implement efficiencies in their booking and budgeting of meetings. Thus an opportunity for buyers, suppliers and intermediaries to partner and create value for each party remains to be worked.

Here is where the fun begins. There is no set standard either within the hotel industry or within the corporate world on just what constitutes a "small meeting." Is it 10 rooms or 50 rooms? Is it a day meeting only? A hotel with 200 rooms may consider a 50 person meeting a "large meeting." A large conference hotel with 1,000 plus rooms may think differently. Factor in that while online travel transactions continue to increase rapidly, the concept is still emerging. Given the lack of standards and definitions, how much progress is realistic when aligning multiple systems from Inventory Management, Property Management, Revenue Management and Sales and Catering Solutions? It isn't uncommon for different properties within even the most advanced brands to operate dozens of different solutions.

The next barrier preventing more online bookings today is the issue of how to manage contracting and payment for rooms. Particularly in the SMERF market, a meeting organizer may need to hold a block of rooms, but may not be willing or even have the credit limit to reserve all of those rooms on a personal credit card. Rooms for these events are typically paid for individually by each attendee. This barrier can exist on the corporate side as well, where the occasional meeting planner does not have a corporate card or the instant approval to make an online purchase or commitment.

This is where a small meeting solution with confirmed corporate participants can help. Users of such a system would already be pre-authenticated and approved to book meetings of a certain dollar value, would typically have an existing relationship with the brand and/or property and are potentially less price sensitive; motivated to quickly and efficiently secure space and communicate to the attendees. Should a corporation choose, they can arrange for preferred hotels to appear at the top of a planner's search. This increases the visibility of preferred hotels and hotel companies that provide negotiated, preferred group rates and encourages employees to choose a preferred hotel partner.

These are only a few of the issues that leaders in the hospitality industry are grappling to deploy seamless, real-time small meetings booking solutions. However, more progress is being made as systems become integrated and partnerships are formed. StarCite and Pegasus recently announced a new partnership that will provide improved and nearly complete transactional capability to corporate clients.

Forrester Research has pointed out that the line continues to blur between distribution channels and marketing channels. Hotel distribution is no longer simply focused on rate and inventory but becoming increasingly integrated into sales and marketing. Imagine the possibilities that exist as small meetings go online. As the technological barriers continue to give way, the others are likely to fall as well, opening up the horizon to a much more efficient and effective way to serve our customers.

Michael Boult is President & Chief Executive Officer of StarCite, Inc. Mr. Boult, joined StarCite in May 2005 with more than 20 years of experience in travel and business strategy. Prior to joining StarCite, Mr. Boult founded eCLIPSE ADVISORS travel procurement solutions, and led the growth of this technology and consulting enterprise as chief operating officer. A frequent speaker at industry events, he has published a variety of White Papers on travel industry issues. He was named on of the top 25 travel executives of 2006 by Business Travel News. Mr. Boult can be contacted at 267-330-0502 or mboult@starcite.com Extended Bio...

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