Imagine it is midnight during a trip overseas, and your CEO wants to schedule an emergency board meeting in New York for the next day — with lunch and a coffee break — and don't forget the company procurement policy that requires you to use a negotiated hotel rate.
Now imagine an online booking tool that holds real-time rates and availability of every hotel, conference center, convention hall, airline, and ground transportation provider with which you do business. Within an hour you have shopped, booked, and paid for flights, a room block, airport pickups, a meeting room, and sandwiches for 12 at a negotiated corporate rate, from half a world away, without ever picking up the phone.
While this scenario is a flight of fancy today, many experts believe that the reality could be right around the corner. In the coming 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 the 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,” says Chris Wilkes, the meetings practice leader for advisory services for New York-based AEBT. She adds that “small meetings,” in this case, are defined as events with fewer than 100 attendees. “A lot of the companies that traditionally focused on those high-profile, high-impact events are starting to see this as the next realm.”
For Robin Buzzeo, director of corporate travel at Hawthorne, N.Y.-based Taro Pharmaceuticals, investing in a small-meetings technology will make sense when it can help her to leverage a combined transient and small-group travel volume with vendors. “It's also about getting an idea of what we're actually spending on these meetings,” she says.
Buzzeo is taking a wait-and-see approach as booking tools for small meetings are developed. “The fear among all of us is that we don't want to complicate matters any more than they have to be. You need to have software that is easy to use, that doesn't make the sourcing process more complicated for a small meeting,” she says. Every company has its own way of dissecting and analyzing its meeting-volume data, she says, and a universal tool would have to allow buyers to access the data that they require.
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, hotels' need to reduce unqualified leads, and the higher revenues generated by online business. However, factors holding back 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.
For example, Hilton Hotels Corp. on March 15 announced a re-launch 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, F&B, and AV services in one online transaction. Customers must agree to a standard contract, and prices are nonnegotiable.
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. Properties load their inventory and rates into the platform, and the booking tool accesses the content. Convincing hotel properties to release control over pricing and booking is not easy, warns Brooks. The goal of the sales staff is to maximize revenues by selling space to groups willing to pay the most, or to keep a loyal customer happy or to shift volume to low-demand periods. The key is for the online booking channel to augment, not replace, traditional sales methods, until customer demand pushes more bookings online.
“This is a paradigm shift. We are expanding and enhancing the way that our hotels do business. We really have to do this in steps,” Brooks says. “Eventually, a few years from now, every major hotel company will have this tool.”
Hilton is looking into additional upgrades for the system. By the end of the year, e-Events is expected to be able to handle groups with up to 50 sleeping rooms, and the chain is working on allowing clients to load negotiated rates onto 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.
“You still have the traditional meeting planner who has a relationship with someone at the hotel; e-Events is never going to take over that,” he adds. “But a certain growing niche is ready, and I think it has a lot to do with Generation X.”
StarCite is another player with a small-meetings tool. Unlike Hilton, StarCite's technology allows users to book a wide 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 in order to address customer demands for greater content control. Originally developed as EasyBook by Santa Clara, Calif.-based OnVantage Inc., the tool had required users to accept a standard contract and nonnegotiable hotel rates. But after OnVantage merged with StarCite, EasyBook was renamed StarCite Small Meetings Solution and re-tooled to give its 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 will 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 that will warn buyers when they are looking for space in a destination that has limited availability.
“We don't officially offer alternative destinations,” Chin says. “We haven't reached the point of providing that yet. It's definitely an area that 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, which is aimed at helping midsize companies to 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 toward automating booking for small groups. Ideally, one day, meeting buyers could access their 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 Travelo-city 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 the traditional and online travel-management companies. We're definitely interested in partnering with them, and we're in discussions in that regard.”
Hilton, too, is evaluating opportunities to load its group inventory into GDSs 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 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.”
One Day: Meeting Content on a GDS
Global distribution systems are electronic supermarkets for travel managers. The legacy systems — Amadeus, Galileo, Sabre, and Worldspan — provide the backbone to online travel sales. According to the Interactive Travel Services Association, a GDS on any given day can access more than 1 billion airfare combinations, 750 airlines, 50,000 hotel properties, 400 tour operators, and 30,000 car rental locations. Even restaurant reservations can be processed through a GDS.
So why not meetings?
That question is being asked more frequently as small-meetings management comes to the fore. Could small corporate meetings be booked and managed using the same systems as their corporate travel cousins?
Some agreements between providers of meetings-related inventory and GDSs have already been announced. Southlake, Texas-based Sabre Travel Network in October announced that it had included Harrison, N.Y.-based Worktopia Inc., an aggregator of meeting-room inventory at hotels and other venues, in its package of sourcing tools for agents. Also last year, Toronto-based meetings tech company Arcaneo Inc. announced a partnership with Madrid-based Amadeus to provide customers with a link to airline inventory.
In the corporate travel world, travel managers negotiate for preferred rates with hotels and airlines once a year. Those negotiated rates are then loaded into a GDS for bookings throughout the year. The systems make their money through transaction fees, which are charged by travel segment. The structure and amount of these fees is a fiercely debated issue among airlines, the distribution channels, and the agencies and buyers that access the content.
Pricing is one potential obstacle to listing meetings content online on a common system, but a model already exists that could work, consultants say. Conference centers traditionally offer a per-attendee, per-day complete meeting package pricing system. This model could work for GDS rate loading because instead of negotiating for individual discounts on services or space, planners could negotiate for a CMP rate with their preferred chains once a year.
Another obstacle to getting meeting professionals to use a GDS for small meetings might be the same trouble that travel managers deal with: Hotel properties are sometimes slow to load the negotiated rates into the system, or they may load incorrect rates. A host of companies offering auditing services has sprung up to help buyers ensure that the rates they worked so hard to get are actually being used in their travel programs. “It all goes back to hotel procurement management, which is what we do. We don't have anything on the group side at the moment, but we're certainly open to expanding into that at some point,” says Bob Peper, CEO of Colville, Wash.-based Lodging Logistics, which monitors negotiated rates for its customers to ensure that they are loaded correctly into the distribution channel.