IN THE PAST few years, electronic auctions have barely made a peep in the ongoing conversation about strategic sourcing of meeting services. But two major players have teamed up to try to change that. American Express Business Travel, New York, launched an e-auction meeting tool last month created by StarCite Inc., the Philadelphia-based provider of meeting-management technology.
E-auctions are fixed-duration online bidding events in which multiple suppliers compete for a buyer's business. They're often dubbed “reverse auctions” because instead of many buyers bidding on one product, many products (hotels) are bidding for the business of one buyer.
E-auctions are relatively well-established in the procurement field, with companies such as Procuri, Emptoris, Ariba, and others helping companies to source everything from bolts and chairs to business travel, but buying meeting services this way has faced the challenge of quantifying the service factor that is so critical to meetings. At least two meeting-specific e-auction tools have come and gone, including Eventsource (which became ProcurePoint Travel Solutions in 2002 and folded in 2004) and a tool from StarCite launched in late 1999.
For American Express Business Travel, the time is right to try again. “It's a response to customer need,” says Jay Roseman, vice president of corporate meeting solutions for AEBT. “It's a compliance issue.” Many companies have a requirement that expenditures over a certain amount must get competitive bids, and the e-auction process, Roseman says, is “about creating efficiencies, bringing more suppliers to the table, and reducing the amount of time” for negotiations.
The auction process, he says, is designed for decision making. Properties invited to participate will have already returned an RFP showing that they have the rooms and space available during the meeting dates and are in the ballpark in terms of rates. They also will have been deemed to have appropriate service levels. During the bid period (less than an hour), participating hotels will enter their bids online, competing primarily in terms of rates, terms, and conditions. Roseman expects to use the tool for about a dozen AEBT clients in the next few months.
StarCite, which created the tool, will not be offering it to its own meeting management clients. AEBT has a one-year exclusivity deal, but what will happen after that is “not known,” says Michael Boult, StarCite's president and COO.