Online RFPs: A Mixed Blessing

Planner Deborah Borak, SMMC, relies heavily on web-based site-selection tools to source hotel venues, and she's not alone -- 73 percent of respondents to this month's M&C Research survey (page 20) called the online RFP process either extremely or somewhat helpful. "Having these tools available now has saved an immense amount of time," says the director of global accounts for ConferenceDirect in Denver. Indeed, the online automation of sites such as McLean, Va.-based Cvent and San Diego-based StarCite provide planners with robust search functionality over enormous global databases of hotels. Borak acknowledges some inefficiencies and potential drawbacks to the online request-for-proposal process, but the time saved vs. the old fax and manual-entry methods is extraordinary, she says. "To have these tools now is fantastic."

But what Borak sees as hiccups, others see as portents of doom. "We have a big problem," consultant Dave Lutz asserts, "and if we don't stop the momentum, where we're going is not sustainable."

Lutz, the managing director of Velvet Chainsaw Consulting, moderated a panel discussion about online RFPs, or e-leads, at the Cvent Corporate Meetings Summit held this past March, where he expressed deep concerns about the sheer volume of leads coming through the various online platforms. Because these tools make it easy to include as many hotels as a planner wishes for just one event RFP, sales forces are being overwhelmed with leads they might have little chance of closing.

Representing the hotelier perspective on the panel were Doreen Burse, senior global account director for Bethesda, Md.-based Marriott International; Michael Dominguez, vice president, global sales, for New York City-based Loews Hotels and Resorts; and Eric Mannino, executive director of lead generation for Nashville-based Gaylord Hotels.

"I really believe that group business should not be commoditized," Lutz says. But blanketing a market with in excess of a dozen RFPs does just that, the way he sees it. "Hotels start throwing lower-level resources against selling, because their RFP volume requires it. The more this business moves toward commoditization, the more we're going to lose the professionals who made a difference when meetings really mattered."

Mike Mason, CEO of online-sourcing platform Zentila, says hotels are struggling with what he characterizes as "lead spam." "Planners can send an RFP to 40 or 50 hotels at once," Mason says, "and salespeople have to guess how real the lead is. They can spend all their time now just responding to online RFPs, and even then, a lot of online submissions just sit there, and the loop is never closed." Zentila, a relatively new tool, limits the number of RFPs that can be submitted for one meeting to eight hotels.

Pumped-up volume Planners sending RFPs through Cvent do so to an average of 13 hotels per event, the company says. And hoteliers are definitely noticing an increase in electronic requests. The number of e-leads Marriott received last year was 44 percent higher than in 2010; half of all the group RFPs Marriott currently receives come from online channels. Marriott's closure rate on those RFPs, however, is 50 percent lower than for what comes through the more traditional channels of phone or e-mail.

"I'm not saying that's a bad thing, per se," says Marriott International's Doreen Burse. "We love leads, but it's forced us to take a look at the way we're deployed, and how we manage the e-lead process."

Marriott is able to respond to every RFP, says Burse, but only through what she calls "e-lead triage." Someone receives the lead and must quickly determine where the RFP is to be routed and the priority it will have. "We're going to handle a complex, three-day, multi-venue meeting very differently than we would 20 rooms for two nights," she adds.

Likewise, New York City-based Loews Hotels has had to dedicate more resources to better organize and respond to the influx of leads, notes Michael Dominguez. "It's become a cost of doing business for us," he says. "But I don't look at it as a big problem, I just look at this as a process that we're all learning." There are worse problems to have, Dominguez adds, noting that "in '09, nobody was talking about how we had too many leads coming in."

Playing the fieldIn Cvent's March panel, there was a general implication that the proliferation of e-RFPs was driven in part by inexperienced planners -- that contacting so many properties for a bid indicates a lack of focus. But that isn't necessarily the case, says Deborah Borak. She admits to exceeding Cvent's 13-property average and confesses she tends to contact 16 or 17 hotels with an e-RFP. "It depends on the group," Borak says. "For an association convention that could utilize any of those properties, yeah, I think you have to do your due diligence for the client."

The key, explains Borak, is how you're using the platform. If she's contacting 17 hotels, she isn't going to ask them for a lot of specifics. "I don't need to know exactly what meeting room you're putting them in," she says. "I just need to know that you have space, and that you have the dates available, and what's your rate out of the gate. And then the rest of this stuff we'll start getting into a little deeper once we narrow the list down, and we come back and really start the negotiation process."

Borak says that fully one-third of the properties she contacts typically can't accommodate the group. "So even if you're sending out 16 or 20 RFPs, you've now dropped down to the average. I can't send RFPs to six hotels and then have five of them not have the availability."

"Maybe there needs to be two parts to the process to get to a short list before we get to the detail," acknowledges Loews' Dominguez. "If you're only sourcing four to six hotels, it's fairly reasonable to be asking for a lot of information. If you're looking at 13 to 18 hotels, it would be much better to say rates, dates and space."

It's incumbent on both sides to be clear and concise. "Hotels say they're getting too many RFPs, but sometimes I get bids from hotels that make me wonder why they're even taking the time to respond," says Borak. Even when she is very specific about space or rate requirements, she often receives responses that fall well outside of what she requested.

"Just give me the dates, rates and space," reiterates Borak. "You don't have to include your menus. I mean, the number of hotels that list every item that's on their continental breakfast? It's a waste. I think if they really read the RFP, and made sure they were responding based on what I asked for, it wouldn't be that overwhelming."

Similarly, having misleading details in the online hotel profiles is extremely inefficient, says Borak. Too often properties might list themselves in the wrong geographic area or as having facilities that aren't actually on-site. "If the information isn't correct in there, then it's a waste of time for everybody," she notes.

Relationship matters At the heart of electronic RFP effectiveness, or lack thereof, is really the same stuff that has defined planner-hotelier negotiations all along -- the nature and strength of the relationship. Learning how that relationship can thrive through these technology channels, though, is what the industry still is figuring out.

"I utilize technology for almost everything," says Katja Morgenstern, CMP, senior project manager with Meeting Consultants in Atlanta, Ga. "But when it comes to sourcing venues and I have the opportunity to have that personal, one-on-one interaction, I like to use that."

Morgenstern thinks platforms such as Cvent are valuable for preliminary research, especially for cities she's not familiar with, but when it comes time for the RFP and decision-making, "I would much rather do one-on-one contacts, or use a DMC I'm used to working with that knows my needs and will only source my meeting to select venues."

When those venues don't have space they often recommend an alternative, Morgenstern adds. "By talking to them I'm still developing the relationship, and they're more willing to help find another venue, even if it's with a competitor, simply because they know that you've thought of them and they want to help you." Morgenstern believes she gets better treatment and negotiating leverage when she contacts venues directly.

Hotelier Michael Dominguez doesn't think technology need supplant that interaction. However, he says, "if you are waiting to build a relationship until the RFP is delivered, it's too late. You've missed it. The idea is to get on the road and know that customer. If you already know who we are, you're going to know what you're buying from us. Then I'm not concerned about the lead process."

Deborah Borak agrees that timing is everything. If she doesn't have a relationship with the property already, immediately upon submitting an e-RFP isn't the best time to get chatty. "I still get those calls, where they say, 'I just wanted to reach out and say hi,'" she explains. "When we get to the short list, I'll reach out to you and have that conversation. First I just really need you to respond."