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April 2013

Is the RFP Process Broken?

By Christopher Durso, Executive Editor

Hotel salespeople say they're buckling under the weight of lead spam. Planners say they're not hearing back about their proposals as quickly as they need to. Is the RFP process broken? And can it be fixed?

You there. Planner. That button you're about to mouse-click. The RFP you're about to shotgun to 59 hotels in four cities spread over three time zones. Those expectations you have of getting a tailored response back from each property within 24 hours.

You could be creating problems for yourself.

To be sure, the rise of online platforms that let you electronically submit your RFP to any number of hotels and other venues at one time has been a boon for meeting bookings, bringing business leads directly to salespeople who otherwise might not have seen them. But on the flip side, eRFPs can bring a lot of leads to those salespeople — sometimes indiscriminately, wasting their time and yours, and sometimes simply more than they can handle in a timely manner, which means they can't answer you as quickly and with the detail you'd like.

The problem is acute enough that there's a name for it: lead spam. “The truth of the matter is, the [planner] is going to choose one property in one city to do this meeting,” said Gus Vonderheide, vice president of global sales - Americas for Hyatt Hotels Corporation. “And yet they have 50 hotels spinning through hoops trying to get back to that customer to determine whether there is availability or not, when maybe the customer never really considered Boston — Philadelphia was always their choice, but they wanted to make sure they were getting all of the information they could.


‘I think as an industry we have identified the problem with RFP spam.’ -Gus Vonderheide

“Multiply that by the amount of RFP organizations out there and the amount of organizations who are using this tool to source their business today,” Vonderheide said, “and you can imagine that there are thousands and thousands of leads that are out there in space that are not really ever going to land in the property. But yet the hotels are having to jump through hoops to get those done.”

 All that said, there's good news — for planners, hotels, and suppliers alike. “I think as an industry we have identified the problem with RFP spam,” Vonderheide said. “It was somewhat frustrating from the hotels’ perspective a while back that we didn't really think that the third-party RFP providers were really listening or hearing, and I can say today that I think it is absolutely top of mind. And that's a huge step in the right direction.”

Spam, A Lot

Online platforms for eRFPs hit the market in a big way four or five years ago, right about when the economy went south, and for a while they seemed like an answer to the prayers of sales teams everywhere — at a time when business was drying up, leads were coming in from all over. But as the economy recovered and group business wasn't so hard to come by, the sheer volume of eRFPs threatened to become overwhelming. It takes a salesperson an average of 20 to 30 minutes to respond to an RFP, according to Elite Meetings International, which offers an RFP engine for higher-end hotels and resorts. And over the last three years, the number of RFPs sent to hotels has increased by 300 percent.

“I feel like it came in a perfect storm where hotels were seeing [the financial crisis in] 2008 happen and hotel rates came down and meetings were shot, and you couldn't do anything in resorts. So there were a lot of things that were happening at the time,” said Bharet Malhotra, vice president of sales for Cvent, which also offers an online-RFP platform. Today, “there's no doubt that we have increasingly heard the whole concept that hotels are getting a lot of leads and they're converting less than they used to, or planners are not hearing back in the right amount of time that they need to hear back, and whatnot.”

Added Robert Gilbert, CHME, CHA, president and CEO of Hospitality Sales and Marketing Association International (HSMAI): “They make it too easy to handle it. That is part of the problem. I think planners get a bad rap when they push out 20 or 30 or 40 eRFPs to that many hotels and destinations, and all of a sudden on the hotel or the DMO side, they're getting the same lead from two or three different sources. They may be getting it from a third party. They may be getting it from a DMO. And they may be getting it direct.”

Dave Nostrand, Marriott International's vice president of sales for the Americas, points out that in their eagerness to cover all their bases, planners can actually shoot themselves in the foot. “We often experience a high number of hotels requested on customer RFPs, which often stems from the customers sourcing multiple hotels,” Nostrand said. “Customers feel that if they source more hotels, it will improve their RFP response rate. This practice can sometimes actually delay response times.”


 

RFP spam is particularly a problem for independent properties, ‘because they have got to juggle manpower at the individual-unit level.’ -Robert Gilbert

Not that those customers always realize RFP spam is an issue. Elite Meetings brought together planners and hotel sales professionals at its Elite Meetings Alliance program at Revel in Atlantic City last August. One of the sessions was a panel discussion on “RFP Process & Volume.” “The panel was about RFP spam, period,” said Kelly Foy, Elite's CEO. “The amazing thing was that about 65 percent of the planner attendees had no idea that was a problem. And every hotelier in the room knew it was a problem.”

For at least one planner, the problem with eRFPs goes beyond how many of them pile up in someone's inbox. “I definitely see [RFP spam] as a legitimate problem,” said Larissa Schultz, CMP, owner of LJS Meeting Strategies, “but I think we need to take a step back and realize this system that we've created in our industry to have everything go electronically may be be broken. And it was a great concept and a great theory, but in practice what you're seeing is, meeting planners can't precisely figure out what their unique needs are, so they ship something out to everybody and hope somebody responds back.”

But not everyone — not even every hotelier — thinks RFP spam is a problem. Michael Dominguez, senior vice president of corporate hotel sales for MGM Resorts International and the selfadmitted “contrarian in the room,” simply sees it as part of life and business in the 21st century. “I'm a firm believer that we live in an on-demand society,” Dominguez said. “We've trained the customer and the consumer to be able to get what they want, where they want it, and how they want it. For us as an industry to dig in and think that we're going to be able to change the way our customer wants to buy from us is a little bit of an unrealistic view of the process.”

The Human Touch

But, like Dominguez says, that's something of a minority view. RFP spam is especially problematic for independent properties, Gilbert said, “because they have got to juggle manpower at the individualunit level, where at least the brands can redirect or reallocate some of their national or global sales teams to deal with some of the traffic.”

Indeed, the larger hotel chains have standard operating procedures for dealing with RFPs that can help keep them in check by rigorously tracking every input. “Marriott has identified response times to customer RFPs as part of its Service Standards,” Nostrand said. “Times are based on arrival dates and group size. For example, 50 peak group rooms arriving within three months will get an RFP back from Marriott within five business hours. As the number

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