'Tis the Season: The rate is 'What'? 

Four quick reminders to bring in RFP business in the Travel Industry
by Jeffrey Hansler, CSP 

‘Tis the season for using those negotiation, persuasion, and influence skills because it’s the thick of RFP season. And as we continue to see the recent gradual shift from buyer to a seller’s market, some organizations are experiencing sticker shock with the rate increase quotes coming back from the properties. The two major factors for an organization switching business from their current property supplier are poor service experiences and dramatic rate increases. Using solid negotiation skills is more critical than ever and the focus must be transitioned from price to perceived value.  

Price is a big issue right now because rates have gone up dramatically this year. Price is never the solo issue. It is part of the triad: Price – Service – Quality. A property cannot deliver the lowest price and the highest quality and service. They can only deliver quality and service if they charge a price that allows for quality and service and profit. One reason rates are increasing is to provide properties the capital to maintain and / or improve quality and service. Without the rate increase, service and / or quality may suffer greatest at the time you are using their property. 

Hotel Directors of Sales and National Sales Managers need to work closely during this time to ensure that they retain current customers while also opening up the opportunity to capture new customers.  Customers who are shopping for new ‘hotel’ rates are doing so because of this recent “sticker shock” experience that they have encountered from hotels that they are currently doing business with. Communication is critical in order for the hotels to achieve these objectives without compromising customer retention and account penetration. Each hotel team member can play an important and different role in successfully capturing the business. 

With regards to the RFP process, the Director of Sales and National Sales Managers are the ones responsible for brining in the business by effectively working with other team members and addressing the positions everyone has. Everyone involved has a position and everyone feels their interests are primary: The owners want to capture maximum rate and are sending messages to the properties not to discount; The National Sales Managers are interested in retaining and gaining business for all their hotels; The Directors of Sales of are working to find a mix that best suits their property; and the General Managers are determining the mix of room allocations between group, volume, and individual travel. There is often as much internal negotiations as there is external negotiations. 

With this in mind, the following are four quick reminders to bring in the business: 

1.     Negotiate internally: Understand the positions of all involved and understand the needs behind each position. The room allocation of 200 rooms instead of 350 for peak night group block ceiling is a position to address the need of greater profits by an increase of higher rated individual corporate travel, while creating a reliable base of business for the hotel and increasing the daily average rate. Positions can and will shift if you can demonstrate that needs can be met in other ways.

2.     Negotiate externally: Work for full disclosure. If the organization says the rate is too high or others will give them a flat rate, ask for the block and rate quote pages of the other hotel’s proposal. If they won’t give it too you, then maybe it doesn’t exist. This can be a very telling definition of not only the negotiation style and the current level of trust, but also the level of intent on the organization’s part.

3.    Tie down commitments: Confirm that if you are able to meet a request, that you have a commitment from them for their business. Otherwise, you will lose credibility internally, and you will find it more difficult the next time you request a concession. Be direct and forthcoming.

4.     Focus on a winning result: You are competing for business, not lowest price supplier. Meeting planners and travel management companies are looking for relationships they can trust. That is value that you must convey to have your property evaluated on something other than price.

Here’s a typical (and very very abbreviated) exchange between O (organization contact) and P (Property contact) with sound negotiation communication being used.  

O: “Your rates are too high?
P: “Can you explain?”

O: “They’re higher than last year and higher than your competition.”
P: “I know they’re higher than last year. In order for me to address your request, can you send me the rate quotes and guestroom block pages from the other hotel proposal?”

O: “Sure, can you match their price?”
P: “Well, I definitely want to try. Before I do, I need to have a bit more feedback from you. What did you like about our proposal? About our property?”

O: “X, Y, Z…"
P: What did you like about our competitors offer?”

O: “P, Q, M….”
P: “If we can’t meet their rate, would you still work with us? If we can’t meet their rate will you allow us to provide other options of value to your organization? And why?”

O: “Can you meet their rate?”
P: “If I can, are you willing and able to make an immediate commitment? 

Did you recognize the use of agreement, set aside, and what if….  in the example above? 

Remember, planners and travel managers are overwhelmed right now and one of your best assets is your ability to keep them on task and help them to sell to their organization the reasons they should do business with your property. Cheapest isn’t synonymous with success and when rates shift dramatically, individuals involved in the negotiations need to be reminded of the relationship of Price – Quality – Service, and trust that they will get an increase in overall value and service along with that rate increase.

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Jeffrey Hansler is a professional speaker, author, and consultant. He is a frequent speaker at association events and is the author of Sell Little Red Hen! Sell! He can be reached at jhansler@oxfordco.com.

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