Already a big dog, MetLife turned heads when it shopped around two years' worth of incentive meetings to hotel companies last year. Fifteen-thousand room nights land on the negotiating table with an impressive thud.
“When we took an enterprise approach to meeting planning, where all of our distribution channels come to one source for meetings, we became a much larger player in the market,” says Bob Pizzute, AVP, conference planning and event services, at MetLife in New York.
But the real twist was presenting 17 high-level meetings for one negotiation. Only chains with serious breadth and depth could sit at that table. Even then it took some heroic efforts to keep the big picture in mind during discussions that included weekend and holiday phone calls in order to meet a year-end deadline.
In the end MetLife partnered with Marriott International, and the pair of giants signed a two-year deal, booking 15 incentive meetings into Marriott, J.W. Marriott, and Ritz-Carlton properties across the country. Those involved call the process “exhilarating,” “groundbreaking,” “exhausting,” and “a major success story.”
MetLife's recognition programs include some of its biggest meetings. They're too important for a cookie-cutter approach to planning, but by late 2002 the meeting team knew the time had come for some consolidation in order to boost their leverage with suppliers.
Getting all meeting requests to come through the planning team was only part of the story, however. There was another issue to tackle first. “There had been pockets of meeting planners working on their own without a central focus,” Pizzute explains, “so that meetings for individual qualifiers who produced the same amount did not provide the same experience.”
Pizzute and his department met with senior management across the enterprise — those in charge of all the company's distribution channels — to propose a consolidation plan that would both save money and create consistency by grouping the incentive meetings into tiers. (See sidebar.)
Once they got executive approval for the consolidation, the team put another idea on the table: With no programs booked beyond 2004, why not fold all incentive meetings for the next two years into one big RFP? “In January 2003 we sat down with representatives from the business lines,” recalls Jeff Calmus, CMP, MetLife's Boston-based director, conference planning and event services. “We proposed looking at all hotel companies and at all recognition meetings for 2005 and 2006, and identifying each hotel company — and hotels within those companies — that matched best with our strategy.”
That research was done throughout the spring, and by summer MetLife's executive committee gave approval for the revamped strategy, notes Cathy O'Brien, director, conference planning and event services. This also marked the beginning of a partnership between the conference planning team and the procurement department at MetLife. “We brought knowledge of the meeting industry and our contacts,” Calmus says. “Procurement brought a systematic approach to requesting information and reviewing that information.”
The team worked with national sales contacts on the hotel side: Mark Frisone, director of national accounts, Marriott International, and Pam Ferguson, director of insurance sales, The Ritz-Carlton Hotel Co. “They had the perspective of the total spend,” O'Brien says. And they had the task of reviewing the big picture with their own sales forces. “Initially, looking at everything, I felt it would be a challenge to get everyone on the same page,” says Ferguson. “But when I pulled the team together, everyone truly wanted to make it work. These are experienced salespeople who embrace the insurance market.”
Once MetLife pegged Marriott as its partner, the real work began. The hotels' projected initial rates were higher than MetLife thought they should be, because MetLife was bringing not just thousands of room nights to the table but also significant history regarding the company's typical recognition meeting.
The company had done some legwork to determine its average total spend for an incentive program, Pizzute explains, and could demonstrate that its average was higher than the average spend that hotels typically use to estimate the value of a piece of meeting business. “It was an important piece of the negotiation to show MetLife's commitment to providing an enhanced food-and-beverage package,” says Pizzute.
Taking that into consideration, says Calmus, the MetLife team “huddled and developed our own rates and concessions to go back to them with, and developed a timeline to get this deal done by the end of 2003.” That timeline included legal reviews — never the quickest items on a planner's to-do list — and at this point it was already mid-November. For six weeks, the MetLife and Marriott teams became part of each other's lives 24/7. Says Calmus, “We'd say, ‘Great, it's Friday. Only two working days until Monday.’” Calls came on Christmas, New Year's Day, while walking through airport security. “We learned a ton about each other and about what works and what doesn't,” says Marriott's Mark Frisone.
In early December the teams came face to face in New York for some real cramming. “We worked on the nitty gritty — space, rates, concessions — 10 to 12 hours a day for two days. There were hundreds of details,” says Calmus.
“We went through every program, every proposal, every concession,” says Ferguson, adding that sales directors at the individual properties were near their phones to participate in conference calls as needed. After plenty of back and forth and a contract framework that went through the legal departments of both companies in record time, the deal was struck.
“Rates were different based on the time of year and availability, but we had developed concessions that every hotel agreed to. That's where the rubber hit the road,” says Calmus. “This deal is only as good as the smallest meeting going to the smallest hotel.” In other words, with its 15,000 overall room nights in the background, MetLife got as good a deal for a 3,800-room-night program as for a 220-room-night meeting.
Pizzute says there was no specific amount the company tried to achieve in cost-savings. “We wanted to get the absolute best possible deal,” he says, “but we don't want to lose focus on the quality of meetings. We didn't want to just negotiate harder and harder. The programs had to meet our standards.”
There's more to come. “We will go out with RFPs to all the hotel chains again,” Pizzute says. And not just with a roster of incentive meetings. The team is working on bringing together other meetings to negotiate on a package basis as well, after this groundbreaking effort proved so successful.
“In my 25-plus years I've never entered into a negotiation like this,” Ferguson says. By all accounts the process included the kind of camaraderie and hard bargaining that deepens relationships and creates long-term partners. Says Frisone, “It isn't until the deal is done and you step back that you see how something like this has such a positive impact on so many people.” Ferguson gives a lot of credit to the MetLife team. “We couldn't do it with just anyone,” she says. “They genuinely wanted it to be win/win.”
But before it starts sounding too touchy-feely, the reality is that it came down to the business. “The relationships we have developed for a number of years set the tone for this deal, specifically in terms of shared goals, proper communication, and a sense of cooperation between the companies,” Calmus says. “But relationships alone do not get the deal done. Often we negotiate with hotel companies where we have very strong relationships, but the deals do not always end in an agreement. The elements of the deal, the business we are bringing to the table, and the products and services that our hotel partners are offering drive the deal. It is about the business.”
MetLife recently consolidated planning of incentive meetings. Saving money was a huge driver of the consolidation, but just as important was the goal of creating a consistent experience for the same qualification levels across distribution channels. Recognition meetings were grouped into three tiers:
Tier 1: This encompasses only one meeting, the Chairman's Council, attended by the most elite producers across the enterprise.
Tier 2: These meetings require the highest qualification level for each distribution channel.
Tier 3: This represents a common initial level of recognition for each distribution channel.
Tier 4: Training meetings fall into this level.
Each tier, explains Bob Pizzute, AVP, conference planning and event services, “has specific guidelines for the length of the program, type of property, activities, and entertainment.” In other words,“if it's a Tier 2 meeting, it should look and feel the same as any other Tier 2 meeting.”
Which is not to say that there is less of an emphasis on quality or screativity in any of the tiers. A Tier 3 meeting, Pizzute notes, is “a very high-quality meeting. And as people do more, they get more.”