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.

For comments on this article, or to simply connect with me, feel free to leave a post or email me @ me@moussli.com

How to Handle Key Challenges That Face Buyers During an RFP Undertaking

In my previous articles, The Evolving Role of Procurement in Modern Organizations – How Vendors Should Adapt to the RFP Process, and Why Global Corporations Must Source Their Hotel Spend And Run A Reliable Global Hotel Program? I try to build the case for the importance of managing the RFP process in a more methodological manner. In this article, I try to touch upon some of the key challenges that face the Buyer during a typical RFP undertaking, and how best to handle these challenges.

Although the focus of this article is on the Buyer, which is in this case, a typical global organization that is sourcing travel commodities such as hotel room nights or air contracts, the key challenges could be applicable to other types of commodities or services being sourced by organizations of any type or size.

The key challenges that face Buyers during an RFP undertaking include:
- Defining Requirements
- Managing Communications with Vendors
- Choosing The Proper Technology
- Implementing a Project Management Approach
- Evaluating The Bids
- Contracting & Performance Measurement
- Managing a Global Program

Defining Requirements
Although, this seems to be a straight forward point, it is sometimes looked upon as a major hurdle. Not only the Buyer needs to clearly identify its needs, the Buyer must be able to fully articulate these needs and requirements to the vendors. Otherwise, the RFP process will not be as effective and will not yield the aspired objectives.

Managing Communications with Vendors
Once the RFP’s are out, and vendors start working on their responses, communication back and forth with the vendors becomes a key success factor for the RFP process, since in some cases, the number of vendors in a single RFP process, may reach hundreds of hotel properties simultaneously, especially when managing a global hotel RFP program.

As a best practice, the Buyer has to designate a project manager to handle the communication with the vendors during that process. A single point of contact for all vendors. If you have multiple contacts, this will create a havoc during the RFP process, and may lead to mixed communication messages, and confusion down the road. The designated project manager must be knowledgeable about the Buyer’s needs and stakeholders, and how the RFP will be evaluated. The project manager, ideally, has to be knowledgeable as well about the industry of the vendors. He or she could be the procurement manager, or travel manager, or even an independent consultant who has strong expertise in the field.

The communication has to be fair, as some questions may lead to answers that could give certain vendors competitive advantage. Therefore, as best practice, it is always better to collect all questions from all vendors within a specific time frame - call it questions period - and then, the project manager aggregates all these responses into one Q&A sheet and distributes it at the same time to all vendors, to make sure that all vendors have the same level of information.

Choosing The Proper Technology
Many new portals and applications are out there in the marketplace that offer great benefits for typical RFP processes. As the marketplace is crowded with many technologies that offer many functionalities and tools, the RFP manager must decide on which technology is suitable for the purpose of his/her specific RFP before embarking on the undertaking.

I strongly recommend doing some research before deciding on which technology to utilize. I recommend going with the technology that is simple enough to streamline the process, and enable proper flow of the RFP, including communication with the vendors, sending out the RFP’s, receiving bids, and submitting counter-bids. The technology has to be simple to use and accessible for all vendors equally. As best practice, you need to ensure that the vendors do not have to purchase any licenses or additional software in order to have access to the technology, as this could lead to vendors dropping out of the RFP, and loss of opportunity for both sides.

Implementing a Project Management Approach
Buyers must realize that an RFP undertaking is actually a project, with a beginning and end. It is not an ongoing process. Therefore, it is critical to run the RFP utilizing a project management approach, by which I mean, to identify the requirements and end results, key stakeholders, key evaluation criteria, and most importantly, key milestones and timelines.

The communication with the vendors has to include all of the project components mentioned above, and it must clearly identify to the vendors the specific milestones, and timelines. The Buyer, as well as, the vendors must adhere to these timelines to ensure that the project is kept on track, and the required results are fully attained,

Sometimes, especially when the participating vendors in an RFP have other business relationship with the Buyer (and whoever is managing the RFP), the line between the RFP process and the other business relationship could become blurry. Participants could discuss multiple business issues on a conference call, and timelines could become overlapping and confusing for all parties. Therefore, it is the responsibility of the Buyer to keep things on track, and clearly separate the business pertinent to the RFP from other business. This circles back to my second point of assigning a project manager to run the RFP, and it would be even better if the appointed project manager happens to be independent, or at least, is not involved with the vendors in any other business during the RFP process.

Evaluating The Bids
Another hurdle that the Buyer has to address before embarking on an RFP undertaking is on what criteria the bids will be assessed on and contracts will be awarded. The Buyer has to be clear and decisive on the criteria, and make sure to communicate that to the vendors.

Generally, the criteria stem from the goals and requirements of the Buyer. What are you looking for in the vendor/or the service provided, to be able to make the decision to award the contract or preferred status to that vendor? Some criteria to consider: (mainly for hotel commodities)
- Rates or discounts
- Amenities like breakfast, internet, etc
- Proximity of hotel location to a corporate point of interest, facility, or client location
- Chain affiliation; loyalty program
- Market tier; luxury, upscale, mid-scale, or budget
- Extended stay viability; especially if your travelers travel on long stay projects (like engineers or consultants)

Knowing the criteria from the beginning enables to project manager to prepare a more focused solicitation list, as well as, manage the RFP process more efficiently.

Contracting & Performance Measurement
Contracting and performance measurement are critical components for any successful RFP undertaking, and any procurement practice. The Buyer has to be clear and up front with the vendors on how the contracting will be executed, when the contracts will be drafted, and by whom. In addition, it has to be clear whether the contracts are electronic or in hard copies.

Performance measurement has to be part of the contracting process as well. There has to be clear measurement indicators in the contract for both parties. For example, in a hotel contract, there has to be clear understanding that the hotel will load the accepted rates and inclusions to the applicable Global Distribution Systems by specific timeline. In addition, there has to be some sort of quarterly or monthly reporting that reflects the room nights being spent by the Buyer’s travelers, and how much they are paying in terms of room rates, and amenities. All of that has to be clearly indicated in a contract to ensure transparency and clarity.

Performance measurement does not only guarantee the rights of the Buyer, but also, aids the vendors in case there are certain revenue thresholds or business production levels that the Buyer has agreed to during the RFP.

Managing a Global Program
Finally, as businesses are growing globally with the emergence of markets in Asia, Europe, and the Middle East, it is highly likely to be involved in managing a true global RFP. This increases the complexity of RFP undertaking management, by getting involved with vendors from different cultures and backgrounds. Some of the incremental challenges for managing global programs include:

Language barriers; Buyer needs to deal sometimes with non-English language speakers
Time zone differences; Buyer needs to deal sometimes with vendors with 12-hour time difference
Cultural differences; this could become an issue during negotiations or regular communications. Buyer has to be sensitive to any cultural differences that could impact the relationship with the vendors
Technological differences; not all countries are at the same level of internet adaptability, or accessibility
Business practice difference; not all countries have the same set of business practices or cultures. This increases the need for enhanced communication to be able to clearly articulate the Buyer’s needs and objectives from the proposed relationship via the RFP

In conclusion, while the above mentioned challenges include most of the potential hurdles that the Buyer would typically face during a typical RFP undertaking, there could be more hurdles to consider based on the Buyer’s industry, requirements, or even economical environment. The main point is that the Buyer has to clearly define and anticipate all potential challenges that could face the RFP undertaking, and to proactively, address each one of these potential challenges to ensure a successful and efficient RFP process.