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Since The RFP System Is Broke Will You Collaborate To Fix It?
By Tom Costello
Last week I wrote a post that took a look from 10,000 feet into the staggering costs to hotels in managing their e-RFP flow. At the end of the day, it doesn't take a meeting and event planner, an e-RFP distribution channel, sales manager or a senior executive from a major hotel brand to admit that the system is ‘broke'.
I also received a couple dozen calls and emails from meeting and event planners, distribution technology developers, and sales managers who were in complete agreement. I can only assume that more of you wanted to do the same.
Since I started this discussion, I'll try to provide some insight into what I believe are just some of the reasons why the system is broke and alternatives that can help to clean up this mess.
If we all can agree on one thing, there are primarily three parties involved in the RFP distribution chain.
1. Planners that send leads
Let's start with planners. In my opinion, there are two categories of planners. Professionals who plan meetings and events as their core business (corporate, association, third parties, etc.) and non-professional planners (travel agents, executive administrators, team event coordinators, etc.) who plan meetings or events but don't have nearly the same level of experience and expertise as compared to a professional planner.
"There are so many e-RFP tools and a few "open source" distribution channels available that it makes it easy for planners and third party buyers to flood sales departments with inconsistent meeting information", says Tim Brown, Chief Executive Officer with Meeting Sites Resources. "This is perceived as "RFP Spam" and limits both hotel responses and converting e-RFPs to contracted business."
If anyone can sign up and open an account on an open source distribution channel, then the leads that are sent to hotels are only as good as the planner and the information that they provide when sourcing a piece of business to a hotel.
It is widely known that many independent and third party planners use open source distribution channels and can send up to 50 RFPs per meeting or event to hotels with some requiring that each hotel turnaround the lead within a 24-hour to 48-hour time frame regardless of when their client will be making a decision on a short list or to award the business to a prospective hotel.
If there are not enough hotels that respond to the lead or the lead has been turned down by a number of hotels, then the planner has one of two options...present their client with the hotels that did respond to the lead or two, send out more RFPs to fill their client's response grid.
I am not pointing the finger at independents or third parties. They are only one part of this equation. The other two are the open source distribution channels and the hotels that agreed to a variety of policies and procedures that are no longer feasible in today's e-marketplace. It is safe to say that all of these parties are part and parcel the reason why the system and its associated policies are broke.
Let me get out my calculator and make some assumptions here. Five meetings or events a year...50 RFPs distributed per meeting or event...3,000 planners using open source distribution channels...750,000 leads per year...2 percent percent conversion rate???
Great business model for lead generation...bad business model for hotels.
RFQ/RFI vs. RFP
The first alternative to the 24/48-hour turnaround is a Request for Quote (RFQ)/Request for Information (RFI) vs. an RFP. When a planner needs a quick response and the meeting or event is more than say 120 days out, then why not send a RFQ/RFI that will in turn provide the planner and his/her client with dates, rates, and availability? With an RFQ/RFI, the hotel could respond to the planner in a timely fashion, the planner could respond to the client in a timely fashion, the client can decide on a short list, and then move to a full RFP and/or full proposal from the hotels that made the short list.
The second alternative calls for the distribution channel to limit the number of hotels that a planner can distribute an RFP to, say no more than 10 per meeting or event, keep the 24/48-hour turnaround time frame in place, and reduce the decision-making window for the planner's client to accept or reject the hotel's response within the 24/48-hour time frame. After that, all deals are off the table.
Planners - Ask yourself what is the value to you, your company, and your client if you are involved in the practice of RFP Spam? The answer is none. Come hell or high water you will place your piece of business in some hotel but the more spam you deliver the better chances that your RFP winds up in the round file and your client doesn't get what he/she expects and deserves.
Distribution Channels - Consider the value of collaborating with planners and hotels and consider changing your policies or risk getting left behind by another channel developer who will provide a more intelligent way to conduct business. I remember, not too long ago, when StarCite was the king of the hill. Where are they now?
Hotel Brands - Convince your "partners" to change policies that you are squawking about behind closed doors. You are paying a fee for leads and commissions on rooms booked and consumed so come to grips with the fact that you are driving the bus and not the passenger who is along for the ride.
Sales Managers - What value do you bring to your hotel owner when you don't take time to respond to a lead or hide behind an electronic veil and don't even take the time to pick up the phone and communicate with a planner who has presented a qualified lead? There are plenty of folks who are out of work who would love to have your job.
What do you see as the problem and how would you fix it?
About the Author
Tom Costello is the CEO and Managing Director of iGroupAdvisors, a performance improvement consulting firm that specializes in the hospitality and travel verticals. Connect with him on LinkedIn, Facebook, and Twitter or contact him by email.
Source: The Advisor
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