Convergence BPO, In-Source or Out-Source?
01 June 2009
As convergence in hotel and meeting spend increases, Peter Dennis, head of ICOR, BSI's specialist consulting and procurement division, considers the benefits to corporates of outsourcing for www.ABTN.co.uk
The industry buzz-word in the corporate travel world right now is "convergence" i.e. the bringing together of transient hotel spend with meetings and events spend. Indeed many people in the industry believe that this is the last bastion of managing corporate travel spend and one that could reap significant efficiencies, let alone savings, via negotiated partnerships with key hospitality and leading hotel chain suppliers. Even the UK's Institute of Travel Management (ITM) has recently changed its name to that of The Institute of Travel and Meetings which is reflective of this trend.
For the BSI Group and in particular here within the ICOR division (The BSI Groups specialist consulting and procurement division), there has never been more interest and focus from our current and potential customers on the benefits that convergence could bring them.
This heightened focus is, I believe, being driven in part by the effects of the current recession and the ever pressing needs of corporate procurement personnel to drive even further savings and efficiencies on the part of their organisations within these two categories. Businesses also have the added pressure of ensuring they capture and control all of this related spend.
Recently, a lot has been written in the corporate travel press on the subject of SMMP (The Strategic Meetings Management Process) and quite a bit has been discussed at the leading corporate travel management conferences on the process itself. But for many corporate, it still boils down to working and negotiating with approved and preferred suppliers in order to drive the real savings and to ensure that duty of care considerations are met in selecting and sourcing the right hotels and venue suppliers.
Many businesses still prefer to conduct their annual hotel RFPs (Request for Proposals) themselves, believing that by dealing directly with the hotel suppliers and chains they will achieve the very best deals. However, the questions I believe they have to ask themselves are: how much time, effort, resources and costs are involved each year in conducting this annual exercise? What tools will I need to deploy in order to achieve this for both hotels and venues? How can I benchmark the rate returns?
It is these questions combined with the current drive towards convergence that have led a growing number of corporates to consider outsourcing this annual process to procurement specialists. Specialist companies, like ICOR, have the tools and processes, and the right hotel and venue databases from which to source and benchmark. Specialist companies also have the experience, knowledge and the supply side relationships to achieve the very best deals and source the most suitable accommodation and venue providers.
The supply relationship angle is key given that many of the worlds leading hotel chains still have separate corporate sales representatives for the corporate transient bedroom requirements and for the meetings and conference requirements. It is rare that these representatives meet to discuss a client's joint convergence needs, although this is now slowly changing with some of the larger global chains.
It is important that we are engaging with hotel chains at the highest management level in order to evaluate fully what sort of deals can be obtained for corporate customers through convergence strategies. To date the results are very encouraging particularly in light of their own need to secure volume deals due to the current economic downturn.
Equally important within any convergence strategy is the technology. From the RFP sourcing perspective it is important to consider how technology can support this for hotels and venues, as well as the controlled search and booking perspective from both a property suitability and policy specific aspect.
When it comes to annual RFP sourcing, we have found that most of the leading hotel RFP tools out there are either American designed or GDS-centric and are primarily focussed on the transient hotel sourcing aspect as opposed to wider accommodation or venue and meetings sourcing. Specialist companies are now developing their own tools. We have developed our own suite of procurement tools - known collectively as ‘RFP Central' which allows us to source both accommodation suppliers (i.e. hotels, serviced apartments ) in addition to conference and meetings venue suppliers.
From the controlled search and booking perspective, there are very few (if any) tools today that combine the ability to book hotel bedrooms alongside meeting rooms in real-time, let alone give you the ability to book an internal meeting room within your own office environment as a first choice policy option. At BSI, we are about to roll-out a new version of our BSIDirectTM online self-booking tool which does allow users to book all of these elements collectively.
Given the current convergence drive, it will become increasingly important for corporates to negotiate with specialist meeting venue suppliers alongside their preferred hotel suppliers and to create preferred meeting venue listings accordingly. That is where the specialist and sourcing aspect comes in.
There is no doubt that the financial crisis and resulting recessionary pressure on corporates and procurement personnel is beginning to drive increased adoption of BPO (Business Process Outsourcing) as an operational cost-cutting exercise across many different categories and services.