In the last couple of 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 recently, created by StarCite Inc., the Philadelphia-based provider of meeting management technology.
E-auctions are a fixed-duration online bidding event where multiple suppliers compete for a buyer's business. They’re often dubbed “reverse auctions” because instead of many buyers bidding on one product, as in a traditional auction, many products (hotels) are bidding for the business of one buyer. [will summarize and link to posted item]
E-auctions are relatively well-established in the procurement field, with companies like Procuri, Emptoris, Ariba, and many others helping companies source everything from bolts and chairs to business travel. But the challenge of sourcing meeting services this way has been quantifying the service factor that’s so critical to successful 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.
Neither of those products took off, but 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 size 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 AEBT auction process, he says, is not designed for information gathering but rather for decision-making. Properties invited to participate will have already returned an RFP that shows 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 determined to have appropriate service levels for the meeting.
During the bid period (typically under an hour), participating hotels will enter their bids online, competing primarily in terms of rates, terms, and conditions, Roseman says. The lowest room rate might not win the business if another property’s concessions are particularly attractive.
Roseman expects to use the tool for about a dozen AEBT clients over the next few months. E-auctions will now be part of the services offered by Corporate Meeting Solutions, a meeting procurement practice at AEBT.
“This is American Express’ tool,” says Michael Boult, president and chief operating officer of StarCite, which created the tool for AEBT and will not be offering it to its own meeting management clients. Boult says AEBT has a one-year exclusive deal on the auction technology, but what will happen after that is “not known.”