The RFP Challenge: How Planners and Suppliers Can Get to ‘Yes’August 1, 2017

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August 1, 2017

The RFP Challenge: How Planners and Suppliers Can Get to ‘Yes’

Woodin,Terri-MeetingSitesResource-110x140Terri Woodin, CMP, is Vice President of Marketing & Global Meeting Services for Meeting Sites Resource in Irvine, California, a strategic meetings management solutions organization with a 24-year track record of meeting excellence. Terri has 30 years of hotel catering, conference services and sales experience, plus five years of meeting planning experience. She is a guest lecturer at Michigan State University, The School of Hospitality Business, from which she  graduated in 1988. Terri can be reached at twoodlin@meetingsites.net.

The planner submits a Request for Proposal, but is it enough to be accepted by a hotel? Conversely, is the product/service supplier being an effective advisor to ensure the planner responds “Yes” to their RFP? Let’s take a closer look at how a lack of understanding of common business practices on both sides of the transaction affects how each views the RFP, and learn strategies for both sides to win in the RFP process.

THE KNOWLEDGE GAP

What is driving this knowledge gap? To start, the compressed business climate continues with May marking the 87th consecutive month of RevPAR (Revenue Per Available Room) growth. RevPAR is used in the hotel industry to make an assessment regarding a hotel’s operations and its ability to fill its available rooms at an average rate. Increasing a property’s RevPAR means that its average room rate and/or its occupancy rate are increasing. This continues to affect the Group segment with room rates projected to increase at a rate of 3.5 percent in the third quarter of 2017 combined with limited occupancy due to strong demand.

THE IMPACT

Given limited availability and high rates, planners are doing “high level” searches with limited information in the RFP and sending them to numerous properties to determine if there is availability and what the rates look like so they can advise stakeholders of which destinations might be an option. The problem is that a hotel declines their RFP due to having no rooms or space available without an explanation as to what that means, because revenue management says there is not enough information in the RFP to be able to bid on it.

THE RESULT

The planner accepts there is no availability and does not ask why there are no rooms or space available (citywide, rooms-to-space ratio, pattern, compression in hotel, definite business on the books, etc.) and proceeds to advise their stakeholder that there is no availability. Door closed.

The supplier misses out on the potential business because they have allowed transactional revenue management procedures to drive the process instead of becoming advisors to the planner by sharing that there is room availability with rates in the mid $200s and asking the planner for more information in order to provide a detailed proposal. Door left open.

The planner can then circle back to the supplier that advises and provides direction as to how to get to “Yes” on their RFP, and also learn along the way how the hotel evaluates its business. This provides a learning experience for both sides through communication that creates a win-win for both sides..

THE SOLUTION

Ensuring that planners and suppliers understand one another is what can help close the gaps in this process.

Planners:

Consider how hotels value their business and understand the variables that influence pricing and availability, so they can get to “Yes” on RFPs. Factors important to hotels include:

  • Transient demand
  • Arrival/departure patterns: flexibility
  • Rooms-to-space ratio
  • Group food & beverage spend
  • Sleeping room spend
  • Seasonality: demand over your dates
  • History
  • Lead time
  • Value of total account business
  • Repeat business potential
  • Multiyear contracts
  • Incremental/ancillary revenue
  • Risk (contract clauses)
  • Other groups contracted over same dates

Assess your leverage by understanding average industry profit margins and how your RFP contributes:

  • Rooms: 77 percent
  • Group F&B: 38 percent
  • F&B outlets: 19 percent
  • Recreation/spa: 15 percent
  • Retail/misc. departments: 15 percent

Suppliers:

  • Consider how you administer the revenue management process to change your level of involvement from reacting to becoming an advisor.
  • Be specific in your decline: No available rooms or no space is not a reason for a decline. Ask why there is no availability — is it citywide, definite business on the books, rooms-to-space ratio, patterns or something else.
  • Offer solutions: What do they have to change to get a “Yes” on their requested dates rather than just asking if they have alternate dates?
  • Be a trusted advisor: You know your hotel best so manage the process rather than letting the revenue management process manage you, and help your client get to “Yes” and your property to get the business (revenue).
  • Think outside the box: It’s not what you book but what you move! Build a wall between groups and put the puzzle together by getting creative.

Dates, rates and space: If you responded “Yes” to the RFP but changed the client’s requested specifications, then be an advisor, rather than saying you can do it when you really can’t. If the client finds out after you have been short-listed, they will ask you to map the space flow. Be ready to identify exactly what you changed in your response.

MANAGING THE GAP TO GET TO YES
When Strategic Meetings Management (SMM) meets Hotel Revenue Management (HRM):

  • SMM delivers measureable value to meeting stakeholders.
  • HRM maximizes revenues/profitability.
  • Utilize strategic RFP process; break down all meeting components.
  • Assess total revenues/account value/variables over meeting dates.
  • Emphasize overall goals and objectives, and determine flexibility points.
  • Success requires open, honest communication at all stages of the RFP process.

4 STEPS TO VALUE-BASED COMMUNICATIONS

  1. Utilize strategic RFP.
  2. Leverage your history, revenue contributions and future potential.
  3. Share your flexibility.
  4. Have a conversation to learn what the hotel needs and convey what you need with understanding to move to “Yes” for your RFP

CONCLUSIONS

Education and training is so important in your position as well as in how the other side operates within their processes. If your company is not providing training that helps you do your job better, then seek avenues to learn and grow.

Planners need to understand both the purpose of the event and what it requires for success, and then communicate with the organization they work for and the venue they are partnering with, to execute the best outcome for attendees and stakeholders. Bridge the gap of communication, and understanding will be possible for both sides.

Suppliers need to move away from transactional RFP responses and be advisors and provide solutions to the planner’s thought process of what’s in it for me (WIFM) to design an experience that exceeds expectations throughout the RFP process. Be forward thinking and assist clients to understand the current environment and conditions that affect hotels, stakeholders and the industry.  C&IT

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