Wednesday, February 3, 2010

Implementation Process: A Critical Component For The Success of Corporate Hotel Programs

Building on the theme of my previous articles, 'Why Global Corporations Must Source Their Hotel Spend And Run A Reliable Global Hotel Program?', and 'How To Handle Key Challenges That Face Buyers During an RFP Undertaking', I would like to discuss in this article the importance of the implementation process for the completeness of any corporate global hotel program, and share a few best practice tips to ensure its success.

Global corporations, with tens of millions of dollars of transient travel and entertainment spend, go through a lengthy RFP process every year to build and maintain their global hotel programs. In some cases, travel managers and consultants work for 6 to 7 months to complete this process. Most of the time is spent on building and nourishing partnerships and relationships with major chains and properties in the markets their employees travel frequently to, and on negotiating fair rates and amenities inclusions to ensure that travelers are getting the best value and service available in the marketplace.

This is fine - and actually imperative for the success of any hotel program - as long as, travel managers and consultants are, as well, adamant about addressing the implementation process, which is of equal importance to all of the above.

Often, the implementation plan is left neglected till the end of the RFP process, as an after thought. In some cases, not rigorously planning the implementation steps had harmful implications over the entire RFP outcome, and had deprived corporations from realizing savings they had negotiated so hard. Imagine for example, if the negotiated rates were not loaded properly to the Global Distribution Systems (GDS), or were not available on the online booking tool!

The following are key implementation process elements that any travel manager or consultant managing the RFP process has to plan carefully, and a head of time, to ensure the success of the RFP process, and consequently, the entire global hotel program:

- Rate Loading Instructions
- Rate Audit
- Rate Audit Follow Up
- Program Visibility
- Program Compliance and savings tracking

Rate Loading Instructions
It is imperative that you provide a clear and specific rate loading instructions to your preferred vendors. The instructions should include the PCC codes, IATA agency numbers, as well as, any other instructions that you deem necessary. examples:
- Any applicable GDS systems
- Amenities inclusions
- Tax inclusions
- Room types
- How you would like your client/corporate name to appear in the GDS

Rate Audit
It is crucial to ensure that what has been loaded to the GDS, is actually what you have negotiated and agreed upon with the hotels. It is not unusual to have rates loaded inaccurately, or without proper amenities inclusions. In some cases, the rates are not loaded altogether. This is why it is imperative to have at least one rate audit before the beginning of the program year to identify those properties that have not fully complied with your rate loading instructions, and take necessary steps to remedy the situation before the program year starts.

Rate audit is usually run by the corporation designated Travel Management Company (TMC). I strongly recommend utilizing project management concepts in conducting the audit, including communicating the following to the properties (or whoever is in charge of rate loading):
- Timelines for running the audit (when it starts, and when it ends)
- What properties, rates, amenities to be audited
- To ensure consistency of results, specify and communicate which dates to be audited
- The results of the rate audit

Rate Audit Follow Up
Once the rate audit is complete, it is important to follow up with the properties that failed the audit. There are many reasons why properties fail rate audits, and this is largely dependent on the level of sophistication and geographical location of these properties. Here are some of the reasons I have seen before:
- Independent properties may not have specialized personnel to handle the rate loading for sophisticated clients and contracts
- In many cases the sales personnel, who negotiated the rates and terms with the corporation is different than the person who is in charge of rate loading. Sometimes, there could be communication gap
- Technical challenges stemming from the use of certain GDS systems, or the lack of it. In some cases, we have seen properties that have no access to GDS systems to begin with

There is no specific industry standard ratio for the result of rate audit, but on average, I have seen some audits with success ratio between 70-80% from the first round. Usually this ratio is lower if you have international country codes in Europe or Asia for example. The ratio could be lower as well if you have more independent properties, as opposed to, chain affiliated. A good practice is to get this ratio as high as 95% through following up with individual properties. For those 5% that cannot make the cut, you may need to remove them from the program, as they offer no value anyway since your travelers will never have access to the negotiated rates using traditional means.

Program Visibility

There is no point of having a global hotel program if employees do not know about it. As most of modern, large organizations have online booking tools, travel managers need to make sure that all of the negotiated rates and amenities are accurately loaded to the applicable booking tools that clearly indicate the preferred vendors and rates.

For those corporations that do not have online booking tools - although I recommend they consider procuring one - they should consider other ways to communicate the existence of global hotel program to their employees:
- Hotel Directory to be distributed to all employees and divisions
- TMC must be obligated and trained to mention the preferred vendors and rates while booking travel for employees
- Travel department sends out emails and memos with the list of preferred properties along with the rates and inclusions from time to time
- Hot line for travelers to contact to inquire about preferred vendors when planning travel

Program Compliance and Savings Tracking
Before corporations track and report the compliance of their travelers, they have to clearly articulate the following three components:
- Definition of compliance: what does it mean to be compliant, or non-compliant
- Mechanism for compliance: what steps the management has put in place to enable travelers to comply
- The measurement of compliance: how management is going to measure compliance, and what are the consequences of non-compliance

In a future article, I plan to discuss the compliance topic in more detail, as I believe it is a very important component for any hotel program or procurement practice. However, for the purpose of this article, I would say that the corporation must have a clear travel policy that provides travelers with specific instructions on how to plan their travel, use of preferred vendors, and when they are allowed to book with non-preferred vendors. Some corporations mandate their preferred program, and some do not go that far; however, in both cases, the travel policy must be put in place, and the management has to ensure that all employees are familiar with it, and have access to it, when they plan their business travel.

The existence of travel policy, and compliance targets, and its communication from upper management, will create the necessary urgency for travelers to follow the policy and comply. This will drive the utilization of preferred vendors, and consequently, the success of the hotel program.

In conclusion, a well-planned implementation plan will enable travel managers and consultants to bridge the gap between the efforts made during the RFP process and the actual travel transactions that incur during the hotel program year.

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