Within the next few years, the small-meetings market is expected to shift toward online automated transactions in much the same way that the transient travel market has over the past decade. After all, online booking for transient travel has been a resounding success. Self-booking tools are estimated to lower transaction fees by 40 percent to 70 percent compared to going through a ticketing agent, according to a 2006 report on online travel by the Sherman, Conn.-based hospitality research company PhoCusWright Inc. The report also concluded that negotiated corporate rates for air, car, and hotel drop by 3 percent to 5 percent on average when using an online process.
While meetings are a relatively complicated purchase compared to business travel, most small meetings only need a room block, air travel, a meeting room, simple catering, and audiovisual services. For all of the creative efforts that go into planning major corporate events, the majority of small meetings are simply transactional, says Lorraine Sileo, vice president of information services at PhoCusWright. Price and availability drive sourcing behavior for this market segment, not creative preferences, she says.
Big Spend on Small Stuff
The stakes are high. Philadelphia-based meeting-technology provider StarCite Inc. estimates that small meetings of 50 attendees or fewer comprise as much as 80 percent of some companies' meetings spend. That meshes with estimates from American Express Business Travel. “We see that among our customer base, 80 percent of spend falls into the realm of small meetings [events with fewer than 100 attendees],” says Chris Wilkes, the meetings practice leader for advisory services for New York-based AEBT.
Some corporate planners prefer to wait until more efficient booking tools for small meetings are developed. “The [feeling] among all of us is that we don't want to complicate matters any more than they have to be,” says Robin Buzzeo, director of corporate travel at Hawthorne, N.Y.-based Taro Pharmaceuticals. “You need to have software that is easy to use and that doesn't make the sourcing process more complicated for a small meeting.”
Forces For and Against
A PhoCusWright survey released in January, Groups and Meetings: Market Opportunity Redefined, reported factors pushing for and against a breakthrough for direct online booking for small corporate groups. Fueling change are an expected growth in the number of small meetings, the need by hotels to reduce unqualified leads, and the higher revenues generated by booking online. Factors holding back online developments include incompatible technology systems among hotels, hotel chains, and other distribution channels; and a lack of a centralized hotel inventory.
The holy grail of booking small meetings online is a tool that allows planners towith any meeting facility in real time for rooms, meeting space, F&B, and AV services; load pre-negotiated rates and ; book air; track spend; and integrate with the transient travel system to report a company's total spend with a particular property or chain. Clearly, the industry is not there yet, but Sileo, for one, expects to see the market evolve quickly through 2007. Indeed, several companies have recently upgraded small-meetings technologies that make strides toward a more comprehensive product.
Hilton Hotels Corp. on March 15 announced a relaunch of its Web-based e-Events for blocks of five to 25 sleeping rooms. The tool previously allowed planners to book real-time room-block inventory but now has expanded to include meeting space, food and beverage, and AV services in one online transaction. Customers must agree to a standard contract, and prices are non-negotiable.
E-Events' upgrade was made possible after the chain created a new online inventory management system, says Bob Brooks, vice president of e-sales at Hilton Hotels Corp. The key is for the online booking channel to augment, not replace, traditional sales methods until customer demand pushes more bookings online, he says. “This is a paradigm shift. ‥We really have to do this in steps,” adds Brooks. “A few years from now every major hotel company is going to have this tool.”
By the end of the year, e-Events is expected to be able to handle groups with up to 50 sleeping rooms, and Hilton is working on allowing clients to load negotiated rates on the system. The chain expects to roll out the tool to properties overseas as more regions are added to its inventory-management system. Eventually, package deals may be offered, Brooks says. “As the technology becomes more sophisticated, you also have the ability to package air, car, and room,” he says. “We're trying to stay ahead of the curve.
StarCite is another player with a small-meetings tool. Unlike Hilton, StarCite's technology allows users to book a large variety of chains and properties, but guest rooms are all that can be secured through the system. Meeting space, F&B, and other small-meeting services must be worked out separately.
In February, StarCite made some important upgrades to address customer demands for greater content control. Originally developed as EasyBook by Santa Clara, Calif.-based OnVantage, the tool had required users to accept a standard contract and non-negotiable hotel rates. But after OnVantage merged with StarCite, EasyBook was renamed StarCite Small Meetings Solution and retooled to give customers the option of loading negotiated rates and contract terms into the system.
After opening up EasyBook to negotiated content, Stanley Chin, senior vice president of small groups and meetings for StarCite, says he has seen more companies load adjusted contract terms into the tool than preferred rates.
Over the next six months, StarCite is testing tools that make it easier for hotels to request rate and contract loading for their content, Chin says. The company is also working on expanding a notification system to warn buyers when they are looking at hotels with limited availability.“We don't officially offer alternative destinations,” Chin says. It's definitely an area we recognize. We need to provide intelligence as a person goes through the booking process.”
Another approach comes from American Express, which recently announced its intentions to launch a small-meetings sourcing tool this spring through its advisory services division. The online system, aimed at helping midsize companies source meetings with fewer than 50 attendees, will be called Preferred Extras: Meetings. It is essentially an electronic catalog of properties in 25 U.S. and six Canadian cities, with pre-negotiated rates secured by American Express.
Customers will have a limited number of properties to choose from in each destination, in a range of pricing tiers. Users will search by city, price range, or location type (such as an airport area). Hotels that fit the meeting requirements would then be listed with a discounted room rate and a per-attendee rate package for meeting services.
The system does not allow for direct booking, but follows a request-for-proposal model. The result is a hybrid solution for booking small meetings, says Wilkes. “Rather than automating the process, we wanted to build in human intervention,” she says. “We really think there is great value in bringing the expertise of our people who do procurement every day into managing this process.”
The GDS Question
As technology develops and partnerships are formed, online booking tools for small events are likely to become more comprehensive and available, Sileo says. Observers agree that a common distribution platform for all hotel chains would go a long way in automating booking for small groups. Ideally, one day, meeting buyers could access air, ground transportation, and all other travel needs through the same system.
StarCite's EasyBook follows a model popularized by transient booking tools powered by legacy global distribution systems, such as Sabre-owned Travelocity Business or Travelport's Orbitz for Business. It's only a matter of time before these online transaction providers turn their attention to small-meetings-related travel, PhoCusWright's Sileo says.
According to Chin, StarCite is “holding a lot of discussions with both the traditional travel-management companies and the online travel-management companies. It's an area that we're definitely interested in partnering with them.”
Hilton, too, is evaluating opportunities to load its group inventory into global distribution systems to allow agencies access to book meetings on the same platform as transient content, according to Brooks. “We think it's important to stick with the brand and grow e-Events,” he says. “At the same time, we recognize that there are others in the market or looking at the market. We want to make sure that we deliver great value to our hotels, so we're always going to look at such opportunities as long as it's incremental to our own tool.”