What Makes Groups Attractive to Hotels?

Hotel executives reveal how they evaluate RFPs

Kim Nugent
Kim Nugent
Vice president of revenue management for Benchmark Hospitality International in the Woodlands, Texas, the bulk of whose properties are conference centers certified by the International Association of Conference Centers

When a planner submits a request for proposal, what kind of scurrying goes on behind the scenes at the hotel? How do a property's sales and revenue managers determine whether to take the business and what terms to offer? To find out how group business is weighed and decisions are made, M&C spoke with four hotel professionals representing various property types and positions. (Our panel of experts is shown at right.)

> Who evaluates requests for proposal?Gus Vonderheide: Although revenue managers play a very significant role at our properties, they're just part of the process. Directors of sales still make the ultimate decision on whether to accept a group or not.

Kim Nugent: The lead starts off with the sales manager, who speaks with the director of revenue. It's the revenue director's responsibility to supply salespeople with the tools to make a good decision about a piece of business. If it doesn't fit or the sales manager has questions, the director of revenue then helps the salesperson find a place that fits with the group's needs and the needs of the property. The general manager is the ultimate decision maker, but between the sales manager, the director of sales and the director of revenue, they can decide on the business.

Vincent Sciabarassi: We use a computer system that learns over the months and years to generate a price point and determine a positive or negative value for the piece of business. We do have a certain ceiling, allowing sales managers to make a decision on their own, empowering the sales team based on the number of rooms in the lead. For a boutique hotel of our size, when we hit the ceiling of 50 rooms, we need to work with the revenue management team to make sure we're not displacing other opportunities.

Maureen Chambers:
More than half of the leads we get are handled by the salespeople on their own. There are still times when I call someone and ask what they think about the piece of business, pulling in the director of sales' perspective or the GM's perspective.

> What do you look at first?Vonderheide: The first thing is the pattern of the piece of business, the arrival/departure dates. There's no cookie-cutter approach for all properties, but we do try to stack groups, with one going in or out, with minimal disturbance.

Then there's rate. Every hotel has an average daily rate they're trying to obtain, so if a piece of business comes in at a rate below what they're looking at for that week, that will raise a flag. If the group is bringing a lot of food and beverage to it, or A/V that I can be a part of, that might offset the low rate.    

Nugent: In the past, we used to say if a group had a minimum of 200 rooms and a rate that worked, we'd book it. Now, we look at what works on a particular day. We look at the potential overall package of the group, and then we compare it to our transient business. Ninety percent of the time, the group is the better piece of business. In a conference center, you could be looking at multiple pieces of business for a given day; you have to compare it in case that's the week you have really high transient demand.

Sciabarassi: First and foremost is the actual day of the group arrival and the number of rooms, to make sure the business fills the profile of the respective hotel. Length of stay is second.

Gus Vonderheide
Gus Vonderheide
Vice president sales, group, for Hyatt Hotels Corp. in Chicago; Vonderheide is a 17-year veteran with Hyatt

> What do you consider next?Chambers: The top things that often fall outside our patterns are the F&B contribution and the rooms-to-space ratio. A lot of meetings have a lot of breakouts, so we're trying to puzzle the rooms together. We try to educate the customer about reusing the space. Maybe they can take the room that was used for a general session and use it later for lunch or a breakout. That would get them a better rate and better availability.

I understand the customer sometimes wants to hold back a bit of information, but all potential revenue should be disclosed, because it helps the cause. One time a planner didn't disclose how much they were willing to spend on F&B, but that would have helped us evaluate the business for what it truly was -- a lot better than it looked on the RFP. Some of my hotels get so many leads, I want to know what each one is all about so I can put the pieces together.

Vonderheide: Multiple meeting opportunities are a key for me. If a customer is looking to use a couple of Hyatts, I will make sure the hotels understand the value of the piece of business to the company. We look at customer loyalty, how much business they've done with us.

> What are some RFP red flags?Chambers: Because we're coming out of the downturn, there are still major, major concession lists out there. It is hard to say no to these requests as things are getting better, but if customers could come with a rating system for each of those items, that would let us know what's going to make the difference for them.

My red flag is raised when planners start by throwing out that list of concessions before they really know what we have to offer. If the planner can send in a shorter list, they will get a quicker response from our team, and then the real negotiation can start.

Nugent: The only red flag to me, really, is that the piece of business just doesn't fit over a particular date. Every piece of group business has a place, and it's about finding a way to make it fit.

Our job is to understand the need behind the item that raises the flag. I will find out why the group wants an elephant in the ballroom, and whether they might put the elephant in a tent in the parking lot, instead. I try to give them something in return that has value. But sometimes you have to understand what the walk-away point is.

> What do you really like to see in an RFP?Nugent: We love it if planners can give us as much information as possible. We need that to give them back a decision much quicker. What's the total program? How much space do they need? What's the F&B requirement? Will they be using the golf or the spa? If they have optional dates, that's fantastic, because they might be able to fit on another set of dates with the rate requirement they need. Being flexible on room rate or F&B, all of those things make a difference for them.

Sciabarassi: For our boutique hotels, just the generalities work, not a long laundry list. Limit unnecessary questions and focus on getting the scope of what you're looking for.

Chambers: I love to see five different date options, but that's not typical. I know where the customers are coming from, and I know there are a lot of people involved in the process, but there's often huge flexibility even in moving by just one day.

> How do you calculate the value of the business? Vonderheide: We have to make good business decisions that will ultimately yield the right number for us. But does that mean sometimes I will take a piece of business that might not be so good for me, if we're looking at 10 meetings at Hyatts throughout the year? That's a decision we're going to have to make.

Nugent: There's no set number; every single day is different. At conference centers, we look at total meeting space; we look at it by day part -- morning, afternoon. We look at our F&B -- what is their contribution during that day part? We look at their total rooms. But we don't say you have to meet this number in order for us to take the business. It's about that day and that particular part of the day. They might have a great dinner planned but aren't so strong in the morning and afternoon, and still be a great piece of business.

> What are your pet peeves?Vonderheide: In today's fast-paced environment, we're asked to make business decisions by electronic RFPs, without developing any relationship with the customer. And we do it successfully. But the old process of building the relationship falls by the wayside. Finding the perfect solution of combining the fast pace and yet still being able to build trust with the customer would be the ultimate goal.

Sciabarassi: It goes back to what is being asked of the hotel. Some planners know day-to-day what the hotels have to do, but some ask too much of the property, wanting things to be more client-favored vs. hotel-favored. Our needs are just operational. Even though we'd like to do everything we can to appease the client, we can't do everything.

My biggest pet peeve is hearing that a sales manager is waiting because they didn't get approval from someone higher up. Our job at the property is to make sure sales managers have the information they need to give planners their answers quickly.

> What can planners do to help their cause?Sciabarassi: For us, the more concise they can be will allow the communication to move along quicker. If you're at a convention hotel, working with quick turns and a lot of breakouts, that's a different style of business than we're working with. Our biggest hotel, the 292-room Eventi, has two ballrooms, but the other three work best with groups of 25 to 50 people. We just need the basics.

Nugent: Meeting planners need to say, "This is what I need to be able to make this decision." Making that information available would make it one simple-step process, even if what they need is the specific dates.

Chambers: Planners can help their cause by giving us all the information up front -- giving the salespeople that information will actually benefit the process. It's pretty straightforward what we do. It really isn't a secret.

> What factors would make you jump on a meeting that's just two weeks out?Nugent: If we had availability, it would be really hard to turn that piece of business down two weeks out.

Vonderheide: Short-term business is important to us no matter what. I'm not going to give away the house, but if I've got availability, I've got to find a way to make it fit. The planner is probably anxious, as well, so we can meet in the middle and make a deal.

Sciabarassi: It depends on when the two weeks were. If it were a holiday period or a weekend that one of the hotels is down, it could be a filler and balance your week off. But a number of variables come into play when it's short-term. If the Muse is sold out over the dates in question, maybe we can we refer them to one of the other properties, especially if they don't need to be right in Times Square proper.

Chambers: I would jump that it's coming in! We just had a similar scenario at the Boston Marriott Long Wharf for a week that had been open for a while. This was six weeks out, but as that window closes, booking into an open week makes everyone jump up and down, and the customer gets a lot of flexibility.