Be a buyer in a seller's market: Engineering The Reverse RFP
By John Knob
Senior Manager, Sourcing and Industry Relations at Cadence
If you build it, they will come.
Remember when hotels wanted your business? Ok, maybe that’s a little extreme, but times certainly have changed. As occupancy continues to climb at a record setting pace, many meeting planners are feeling the effects. The solution? Adapt.
Availability is way down, prices are way up (and rising) and it doesn’t appear to be slowing down anytime soon. When hotels have so many options to choose from, and limited windows to fill, how do you ensure your client's program gets a bid?
In this article published by Smith Travel Research and Hotel News Now, Jan Freitag, STR's senior VP for Lodging Insights said, "The July occupancy of 75.3% was the highest single occupancy of any month ever recorded by STR. Hand in hand with this goes the demand of more than 116.8 million room nights sold, which is 4 million room nights higher than last July and another all-time record for any month. This translates to a demand increase of 3.5%, which is a continued healthy clip and actually higher than it was in June (+3.2%)."
The article summed up that RevPAR in the U.S. has increased for 65 consecutive months, and ADR has risen year-over-year at 5.0% or higher for three straight months and four of the first seven months of 2015.
Steadfast meeting planners, the time has clearly come to think about the RFP in a new way. We now have the burden of having to be both the bearer of bad news and devise solutions in this really difficult market. Educating clients on the trends in the marketplace has never been easy and takes time to gain understanding... And even the savviest clients have a hard time understanding they can’t expect the same rates and concessions for consistent annual programs, despite increased attendance and budgets.
At Cadence, it seems the term "successful meeting planner" is becoming synonymous with "creative meeting planner." Because buyers are now sellers and sellers are now buyers, navigating the difficult terrain of today’s seller’s market requires a little reverse-engineering to shift the sales role from one side to the other. It’s up to the creative meeting planner to “sell” their client's programs to hotels and by doing so, gain the edge on their competition.
We call this The Reverse RFP and the idea behind it is simple: make your client's program more attractive to the hotel by designing your request strategically. Here's how:
1. Be the voice of value - Your client don’t always understand what revenue a hotel sees for their program, and hotels are not always able to consider what a program is worth to that client. In order to establish a baseline from which to negotiate, the meeting planner must be an advocate for both from the very beginning stages. By doing so, you’ll often come away with more realistic rates and minimums and cut down on the back and forth during the sales process.
2. Evaluate the rooms-to-space ratio – This is something every hotel looks at. Know the difference between what space you are asking for and what hotels consider fair compared against your room block. This will help you create a balanced RFP that the property can work within.
3. Find flexibility within the program - With any piece of business, hotels are trying to fit your client's program into a window that works for them. Look at the pattern, number of nights, meeting sets, any and all aspects of the program and find where you can be flexible. You just might find your ideal hotel is available with a one day pattern shift or a slight change in your agenda.
4. Plan ahead, but stay open to revision - Think of limitations as creative challenges. An agenda is necessary to find adequate space, but building a detailed program agenda around what is actually available will help spark creativity. Oftentimes, you’ll find you can foster a more connected attendee experience in less space than you initially thought.
Making your client's program stand out in a crowd takes a little forward thinking, but will ultimately reap great rewards. Stay ahead of the game by engineering your RFP’s in reverse and give suppliers the chance to once again fight for your business.
Have something more to add? I'd love to hear it in the comment section below.
John