HelmsBriscoe’s Tammi Krone
says procurement departments
make great partners for
placing meetings.
Procurement. The very word seems to have
taken on a life of its own. Even as some planners grouse about
procurement professionals’ increasing importance in the meetings
business, suppliers have come to embrace them, arguing they are
unfairly mistrusted players in the industry, whose role is largely
misunderstood.
That is certainly the way Tammi Krone sees it. A regional
director for Scottsdale, Ariz.-based site selection firm
HelmsBriscoe, she counts among her top clients a billion-dollar
national wholesale corporation. Over the past four years, the
Duluth, Minn.-based Krone has worked with several different
divisions within the company, helping place more than 50 meetings
annually worth millions of dollars. She says she owes her success
in large part to the client’s procurement department, with which
she has developed a solid working relationship.
“It has been a huge benefit to have procurement behind me,”
says Krone, herself one of the client company’s preferred vendors.
“I think they do their work incredibly well when they go out to
bid, getting all the hotels where they need them and working on
preferred rates. So, when I’m looking to place a meeting for a
department, it makes sense for me to partner with procurement and
reference the preferred vendor list first.”
And if Krone initially cannot find the right hotel match,
procurement is willing to listen to her property suggestions,
simply because she has proven she’s on their side. “At first their
guard was up, but over time they’ve come to see the value I bring
to the company,” says Krone. “Now they give my name to other
divisions that need to book a meeting. Even when I place a meeting
with a preferred vendor, the hotel will give procurement the
negotiated rate and still pay me my commission.”
Hotels buy in
With procurement’s role in the selection process growing due to
companies’ ever-increasing emphasis on the bottom line, the typical
supplier and meeting planner relationship has expanded into a more
complex three-way affair. The planner, by reason of industry
knowledge and experience, might easily grasp the nuances of a
hotel’s RFP response, but procurement has to be made to understand
the value embedded in the only element worthy of its attention, the
room rate which, for a meeting, is often higher than what was
negotiated with a preferred vendor for the company’s official
corporate travel program.
“When procurement is involved, a lot of the time it is an
accountant who is in the middle of the process,” notes David C.
Fine, Key Biscayne, Fla.-based vice president of sales and
marketing for Sonesta Hotels of Florida. “And when you are dealing
with a person who is quantifying everything financially, from one
perspective, usually using a matrix, that’s a tough process.”
Among the steps hotels cite as inherent to procurement-driven
negotiations:
" Proving value. Hotel chains understand that
procurement officials are commodity buyers who simply apply the
same rule for purchasing hotel rooms as they would for purchasing
file cabinets in volume namely, to get the best price possible.
They also understand, however, that simply submitting a bid and
waiting to see if they are awarded a company’s business is the
wrong approach.
The looming influence of procurement has forced hotel
salespeople to emphasize the value inherent in their quotes by
literally breaking them down into quantifiable segments, from the
quality of food and the standard of service right on down to the
condition of public spaces.
“Procurement forces you to be competitive,” says Fred Shea,
vice president of sales for Chicago-based Hyatt Hotels Corp. “Our
sales managers have to show price value, not just price, because
dates and rates are all online, right there for the customer to
see. We are training our people how to do a better job of making
that procurement customer understand the value that goes back to
them, both in service and actual attendee experience.”
Sometimes that means not winning the business. Paul Davis, vice
president of procurement for White Plains, N.Y.-based Starwood
Hotels & Resorts Worldwide, has been working with his company’s
sales force to develop techniques appropriate to a
procurement-based selling environment. “Do you really want to be
the lowest bidder, when you have a higher quality than another
bidder?” he asks rhetorically. “Sometimes it is better to lose an
auction. That’s the message we have sent back to our sales
folks.”
" Standardizing contracts. Because procurement
buys in bulk, many hotel chains in the past several years have
deliberately created standardized meeting contracts. It’s an
effective tool, they say, to snag multimeeting deals, such as
back-to-back training sessions or incentives. Such is the case both
with Boston-based Sonesta Hotels, Resorts & Nile Cruises and
Hyatt Hotels Corp., which a few years ago standardized meeting
contracts at some of their properties. “You offer one standard
contractual deal and get three to four meetings,” says Shea of
Hyatt. “The standardization allows us to offer discounts, which
procurement likes, and it also means procurement only has to
solicit a bid once.”
Offering a standardized contract also gives hotels a bidding
edge, says David Fine of Sonesta Hotels. “If procurement already
has an agreement with us at one property, and we can say the
contract obligations are the same for some of our other properties,
it shaves a lot of time off the whole bidding process,” he notes.
“Procurement likes to see conformity.”
" Making on-site calls. On paper, a hotel’s
bid might not look especially good to a procurement specialist, but
the planner knows the property is right for the meeting. Bridging
the divide often comes down to hotels taking the time to make an
in-person sales pitch to buttress the client’s stand and win over
procurement.
“There often is a struggle getting from the procurement
mentality to the planner mentality, because price is the biggest
factor coming between the two,” says Chicago-based Denise
Lodrige-Kover, vice president of business travel strategy and
strategic partnership accounts for Beverly Hills, Calif.-based
Hilton Hotels Corp. “I feel our job is to help planners educate the
procurement side of the industry, so we have gone in and sat with
procurement officers and explained why we priced our bid that way,
taking them through the process. That open dialogue has been very
successful.”
" Touting success stories. Just as planners
pitch their meeting’s worth to a hotel by touting the financial
success they will bring to a property, hotels dangle the same bait
when pitching their bid to procurement.
“The greatest things to have on hand when explaining the value
built into your pricing, and why the company will have success
holding its meeting at your hotel, are your success stories with
other meetings, especially those within procurement’s company,”
says Lodrige-Kover. “We have to show them that price is not an
indicator of the greatest value.”
SMOOTHING THE WAY
Daphne Meyers, CMM
Daphne Meyers, CMM, came to Microsoft Corp. in 2001, when the technology behemoth bought her employer, Great Plains Software. In the following years as program manager for partner events, she watched a strategic-sourcing initiative spread through the company, focusing first on reining in the amount of money being spent on events.
For the most part, she dealt with procurement officers who had specific roles on the events team people with financial backgrounds who handled the event purchasing. She had no trouble talking numbers with these colleagues but found she had a lot to learn about quantifying the worth of meetings elements that didn’t lend themselves so easily to a spreadsheet. What subtleties in service did a $40-a-plate caterer bring that made that vendor a better value than a $30- or $35-a-plate caterer? And, to be added to Microsoft’s preferred list, was the vendor’s business on solid ground, and would it be able to handle the volume the giant company might send its way?
“The speak I found I was not very good at was how to measure and place value on things that are beyond pricing, like service levels and doing performance reviews of vendors,” says Meyers, who started her own business, Durbin, N.D.-based Red Barn Group, in November. “As we talked about whether we would continue to use certain vendors, it was very difficult to describe why I found them valuable.”
Ultimately, Meyers feels the process changed how she thinks about planning, teaching her to look at an event’s puzzle pieces the way the procurement person would look at them. She then passed this knowledge on to her suppliers. Essentially, she sat with them to come up with ways to measure their services. “I said, ‘I want to continue to work with you; let’s try to figure out how we live in peace in this new world.’”
While some of her sources welcomed the process, it caused trepidation for others. “Some knew they weren’t going to make the cut,” Meyers says. “There were thousands of vendors involved in events at Microsoft, and a lot were redundant.”
Meyers learned how to tell procurement what she needed up front and how the vendor delivered, or didn’t, beyond, “They hire really nice staff, and they’re polite,” she says. -- SARAH J.F. BRALEY
Relationships that work
Procurement, say some suppliers, has gotten a bad rap. Too many
meeting professionals, they charge, unfairly view the department as
playing an adversarial role in the industry. In response to such
concerns, in January, Dallas-based Meeting Professionals
International issued a white paper titled “The Power of
Partnership: Capitalizing on the Collaborative Efforts of Strategic
Meeting Professionals and Procurement Departments.” The paper
advises both planners and suppliers on the challenges of working
with procurement and suggests they “learn to leverage both groups’
expertise for the good of the business.”
" Reaching out. MPI’s statement makes sound
sense to Dianne Killian, CMP. As regional director for
HelmsBriscoe, Killian, based in Columbus, Ohio, handles a large
amount of meetings business for federal and local agencies in her
state. She also serves on the board of the Alexandria, Va.-based
Society of Government Meeting Professionals’ Buckeye Chapter, a
role that has allowed her to bring government planners and
procurement together to learn from each other.
“I have taken more of an initiative to come up with ideas to
help alleviate the frustration of the government meeting planners I
represent within the state and the procurement office we must go
through,” says Killian, who over the past year has organized two
meetings with procurement officials one specifically for suppliers
to vent their frustration about working with them, the other for
meeting planners to discuss issues. The next step, she says, will
be to bring all three parties together.
“Right now, there are a lot of barriers,” Killian notes, “but I
think we’ve opened procurement’s eyes to the uniqueness of
meetings. I think it finally sank in that when it comes to
meetings, conferences and trade shows, they will have to change the
way they buy, because meetings are not just another commodity.”
" Respecting their role. “You know,
procurement folk don’t get their due,” says Fred Shea of Hyatt.
“Today, they are being asked to make business decisions that they
are held accountable for, just like the meeting planner. What
happens when the CEO says, ‘Yes, you saved us $10,000 on that
meeting, but it was a terrible experience for our customers’? It’s
a whole new responsibility for them.”
The way Shea sees it, procurement can be relied upon to fulfill
agreements, simply because they have the clout and the tools to do
it. “If you have a preferred vendor relationship with a company, it
has more muscle because companies now have more control over their
employees, thanks to corporate travel programs,” Shea notes. “So,
on the good side, when procurement says they can deliver the volume
they promise, they can.”
" Providing regular updates. Putting business
out to bid, weighing proposals and pushing volume that translates
into savings these are the key tasks of procurement. Yet, says
Tammi Krone, taking the initiative to keep procurement abreast of
the meetings business that they signed off on, whether it is placed
with preferred vendor hotels or otherwise, goes a long way in
winning their acceptance and approval.
“I do a cost analysis for procurement every month showing what
I am working on, what’s been booked, price, value, everything,”
Krone says. “The planners know I am doing this. In turn,
procurement has come to me asking if I can provide them with
feedback on events at hotels that are preferred vendors, such as
the condition of the property. And over time, they have added
hotels I have used to their preferred vendor list, based on the
feedback of the meetings that were held at those properties. The
communication has been very beneficial to both of us.”
" Thinking long-term. “When procurement first
came into the buying relationship, they were very much ‘lowest
price, lowest cost,’” says Hilton’s Lodrige-Kover. “That is
changing as we educate them on our industry and show them that we
are not just a commodity. It will also help our meeting planner
clients be successful indeed, all of us.”
Fred Shea goes a step further. He says the better planners
understand procurement’s role in the process, the better equipped
they will be to navigate the future buying arena and the two areas
will merge. “I believe planners will come to understand what
procurement looks for, and they will develop their own standards of
doing business that procurement understands and approves,” he
predicts. The end result? “People’s roles evolve. Meeting planners
eventually will become an extension of procurement.”