COVID-19 and Managed Hotel Programs: Release your RFP
By Laura Kusto, Global Hotel Practice Leader
In this entry in our five-part blog series on COVID-19 and managed hotel programs, we will tackle the long-awaited topic of releasing the RFP.
Each year, there is much preparation that goes into releasing the RFP. And when the time finally comes to push the “send” button, it’s a relief. We all know that to some degree the work has just begun, but it means the preparation is over and the RFP is out into the world.
As exciting as it is to release the RFP, this year the preparation is much more important because of COVID-19. If you haven’t yet read our previous post, Determine Your Program Strategy, you’ll want to do that before you entertain any thoughts of pushing that “send” button. If you skip out or cut corners on the strategy, your results will be the same as driving down the freeway while blindfolded. You will crash.
Now that we’ve made that important disclaimer, let’s jump into the exciting topic at hand and talk about getting your RFP out into the world.
Prepare for Hotel Contact Changes
Nearly all hotels have had to cut back on resources, that means the people on property who answer your RFP may be wearing multiple hats. There’s even a chance the person answering is not on property – they could be working virtually, or the property may have shifted that responsibility to someone on the above-property management team. A worst-case scenario is that no one is available to answer the RFP, and this is obviously something you will want to avoid.
If the property belongs to a chain where your company has a national account manager (NAM,) you can try work with that person to confirm the hotel’s availability. However, the national account teams are also severely understaffed. You may have even been informed directly by your representative of specific limitations they are putting on your RFP this season.
The high likelihood of these hotel availability gaps existing is yet another reason why you need to be very selective this year about the number of RFPs you send and the hotels you send them to.
Before sending the RFP, do as much vetting as time allows on the property operational status and their ability and interest in participating. This can be done by working through a NAM, but if they don’t have time (and this will be more the norm than the exception this year) you need to make contact directly with each property. Focus your efforts on top properties and engage your extended travel team and business leads to help. Provide them with a script and forecasted market/property volumes. You can use this as an opportunity to not only validate the property status and participation, but tee-up the business volumes you’re forecasting for them and – most importantly – create a deeper relationship with the hotel.
Send Negotiation Rate Targets
We covered what negotiation rate targets are in our previous post – they are the rates and amenities you want to secure in the RFP from each property. Now we will discuss how to use them correctly.
Negotiation rate targets are important for a couple of reasons:
- First, they serve as anchors. It’s proven that the biggest predictor of the final value agreed-to in any negotiation is the first value discussed between the parties. For example, if a negotiation starts with someone offering $100, the final value agreed-to will be lower than if the first offer is $115. It’s in your best interest to make the first offer.
- They are efficient. When you send a property your negotiation rate targets, our recommendation is to include both a static/flat rate target and dynamic discount (percent off BAR) rate target and advise the hotel that if their first bid is equal to or better than either of those targets, they will be immediately accepted. Doing this gives the hotel a say in which rate construct they offer. It also gives them the opportunity to put minimal investment into the process and quickly get a result that is favorable to them – acceptance into your program.
Two to three weeks prior to launching the RFP, send your negotiation rate targets to your NAMs and hotel property contacts via email. The objective of this communication is to provide full justification for the rate you are asking them to provide in the RFP. Include both the static/flat rate target and dynamic discount target, the amenities and cancellation policy you would like, as well as all the supporting data to justify your request. Supporting data includes the property or market BAR rates/trends over time, your historical preferred rate, amenities at that property and your forecasted travel volumes.
Because negotiation rate targets are a relatively new concept and you want to be certain the hotel has seen your targets and reviews them prior to responding, re-send the communication as a reminder 1-2 more times prior to launching the RFP. Also include the date when they can expect to receive the formal RFP to which they will respond.
Send the RFP
Finally! The celebratory moment has arrived and it’s time to get the RFP out into the world. Send the RFP as you would normally, but give thoughtful consideration to your program year and be prepared to stay busy.
Regarding the program year, if you’re launching prior to your existing program year expiring, you can ask the hotels to make the rates effective immediately. This will re-set your program now and bring it in alignment with current market conditions. Also, include a mandatory question for all properties that states, “if offering a dynamic discount, do you also agree to set this rate to evergreen and only expire when one or both of us would like to sever the agreement?” In doing this, you will not have to spend time – or money – sending them an RFP in future years. Just like that, you are cutting down on a lot of work you – and your dynamic rate hotel partners – need to do in future years.
As far as activities that will keep you and your team busy, there will be two that you will want to be prepared to work on right away:
- Every year, some bounce-back emails are common but this year, expect to deal with even more due to the previously mentioned hotel availability gaps/changes. Plan to have a team of people at the ready to handle these. The best way to resolve email bounce backs is to use the resources readily available to you – internet searches and phone calls direct to the property to get the correct email address. (And don’t forget to tell those making these phone calls to use this as an opportunity to tee-up your RFP.) Once you have the new email, simply re-send the RFP.
- The other activity that will keep your team busy from the start is processing acceptances. With the negotiation rate targets intended to drive immediate agreement, you’ll want to stand by your word of sending immediate acceptance. Be sure you and your team are monitoring the bids coming in and sending those acceptances out with rate loading instructions right away. Hotels will appreciate the partnership. Also, if you did opt to expand the new program year to cover off the balance of the current one, you’ll want those rates loaded as soon as possible.
From there, continue to process the RFPs as per your normal processes. Some properties will still require negotiation, and delays in those negotiations may be more common due to the hotel availability. Do your best to be patient with the hotels, but also stay flexible and open to new opportunities– if a hotel is not showing up to participate, this is the year to let it go and look to other options in that market. COVID-19 has driven demand down to dramatically low levels and for the first time in years, it is a buyer’s market. If you’re bringing good business to a market, you’ve never had a better opportunity to ensure it’s valued at a premium. Don’t let it pass you by.