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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Organizational Buyer Behavior of Group Market
Foreword:
“The ideal salesperson in the company meetings
segment isn’t a salesperson in the traditional
sense, but rather the problem-solver.”
- Robert
II
C. Mackey-
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
OBJECTIVES
After reading this chapter, you should be able to:
• Understand the organizational buying process.
• Identify and discuss the importance of the
participants in the organizational buying
process.
• Identify the major influences on organizational
buyers.
• List the eight stages of the organizational
buying process.
• Identify and describe the group markets in the
hospitality industry.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
© 2010 Pearson Higher Education, Inc.
Pearson Prentice Hall - Upper Saddle River, NJ 07458
Organizational Buyer Behavior of Group Market
Don Walter
• Don Walter is a member of the Convention Liaison
Council’s Hall of Leaders.
II
– he received this honor because of his contribution to the
meetings & convention business over the last thirty years
• Don has purchased or influenced the purchase of
nearly $100 million in hospitality & travel products.
• To Don, honest, straightforward negotiations are the
important factor in negotiating with a hotel.
– “if both the meeting planner and the hotel sales manager
are up front with each other, it saves hours of unnecessary
negotiation for each party.”
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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Organizational Buyer Behavior of Group Market
Don Walter
• Walter does not buy on price alone and avoids
properties that appear desperate for his business.
II
– he claims that often these hotels have financial problems,
which result in staff turnover and understaffing
• You may have to deal with several people because of
the turnover problem.
– when the meeting is held, service is poor, meals take
longer and setup changes are difficult to accomplish
• If the meeting does not go off well, the savings in
cost seems trivial in comparison to the damage done
to the sponsoring association’s reputation.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Organizational Buyer Behavior of Group Market
Don Walter
• When negotiating, Walter looks for a fair deal.
– he expects the hotel to make money, but also expects good
service and overall value
II
• He observes employees during a site visit to get an
idea of the service he can expect for his meeting.
– when he sees an employee pick up a gum wrapper, it
indicates the employees have pride in their hotel
• He likes to go back to a hotel where he sees the same
faces he saw last year.
– low turnover and promotion from within give him a good
feeling about a hotel
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By Philip Kotler, John Bowen and James Makens
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Organizational Buyer Behavior of Group Market
Don Walter
• After signing a contract with the hotel, he likes to
deal with one person
II
– Don brings his own contract, he does not use the hotel’s
• Walter said that requirements of the Americans with
Disabilities Act (ADA) should be a concern to both
hotels and meeting planners.
– compliance ensures that everyone wanting to attend the
meeting has access to the meeting
– failure to comply could result in lawsuits from attendees
against both the meeting sponsor and hotel
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By Philip Kotler, John Bowen and James Makens
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Organizational Buyer Behavior of Group Market
Don Walter
• Don Walter provides an example of the tremendous
purchasing power of an organizational buyer, and
provides some insights into what is important
to meeting planners and association executives
II
– they want good service at a fair price with no surprises
– when they need to make changes during the event, they
expect the hotel or convention hall to be supportive
• In most hotels and many food-service operations,
organizations account for a large percentage of sales.
– business markets differ from consumer markets in
structure & demand, nature of the buying unit, types
of decisions, and the decision process involved
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The Organizational Buying Process
Market Structure and Demand
• The American Marketing Association holds more
than twenty conferences annually.
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– the value of this account approaches $1 million
– a delegate also spends about $850 on transportation and
$425 on entertainment, plus spending in local restaurants
• Hyatt and Marriott share the majority of the AMA’s
conference business, with Marriott’s share close to
three thousand room-nights a year.
– each organizational customer can deliver tens of thousands
of dollars’ worth of business to the hotel, airlines, and the
destination’s economy
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The Organizational Buying Process
Market Structure and Demand
• Organizational demand is derived demand, or a
function of the businesses that supply the hospitality
& travel industry with meetings, special events, and
other functions.
• AMA plans & hosts conferences because members,
marketing managers, suppliers, and educators, have
attended past conferences on these topics.
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– if a particular conference receives poor attendance, the
AMA drops it from future schedules
• Ultimately, demand for association member products
determines the demand for association meetings.
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By Philip Kotler, John Bowen and James Makens
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The Organizational Buying Process
Market Structure and Demand
• Through good environmental scanning, marketers
can identify emerging industries, companies, and
associations, screening for good business partners.
• Hotel managers need to understand the financial
health of the corporations & associations they serve.
II
– if clients fall on hard times, managers need to look for
healthy industries to replace the lost business, before it
affects the revenue per available room (REVPAR)
• Compared with consumer purchases, a business
purchase usually involves more buyers and a more
professional purchasing effort.
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The Organizational Buying Process
Market Structure and Demand
• Corporations that frequently use hotels for meetings
may hire their own meeting planners.
• Professional meeting planners receive training in
negotiating skills and belong to associations such as
Meeting Planners International, which educates its
members in the latest negotiating techniques.
• A corporate travel agent’s job is to find the best
airfares, rental car rates, and hotel rates.
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– hotels must have well-trained salespeople to deal with
well-trained buyers, creating thousands of sales jobs
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The Organizational Buying Process
Market Structure and Demand
• Once the meeting is sold, the account is turned over
to a convention service manager who works with the
meeting planner to make sure the event is produced
according to the meeting planner’s expectations.
• Outside the hotel, jobs relating to meetings include
corporate meeting planners, association meeting
planners, independent meeting planners, and
convention and visitor bureau salespersons.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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The Organizational Buying Process
Types of Decisions and the Decision Process
• Organizational buyers face more complex buying
decisions than consumer buyers.
• Their purchases often involve large sums of money,
complex technical features, economic considerations,
and interactions among many people at all levels.
• The organizational buying process tends to be more
formalized & professional purchasing effort.
II
– the more complex the purchase, the more likely it is that
several people will participate in the decision-making
• In the organizational buying process, buyer and seller
are often very dependent on each other.
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Participants in the Organizational Buying Process
The Buying Center
• The decision-making unit of a buying organization is
sometimes called the buying center:
– Users - those who use the product or service
– Influencers - directly influence the buying decision but
do not themselves make the final decision
– Deciders - select product requirements and suppliers
– Approvers - authorize proposed actions of deciders or
buyers
– Buyers - have formal authority for selecting suppliers and
arranging the terms of purchase
– Gatekeepers - have the power to prevent sellers or
information from reaching members of the buying center
Marketing for Hospitality and Tourism, Fifth Edition
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Participants in the Organizational Buying Process
The Buying Center
• Buying centers vary by number & type of participant,
so salespersons calling on organizational customers
must determine:
–
–
–
–
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who are the major decision participants?
what decisions do they influence?
what is their level of influence?
what evaluation criteria does each participant use?
• When a buying center has multiple participants, the
seller may not have time/resources to reach them all.
– smaller sellers concentrate on reaching key buying
influencers and deciders
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Participants in the Organizational Buying Process
The Buying Center
• Most deciders like to feel in control of the purchasing
decision, so going over a decider’s head & working
with the boss will be resented.
• In most cases the boss will leave the decision up to
the decider, and the ill will created by not dealing
with the decider directly will result in him or her
choosing another company.
• Larger sellers use multilevel, in-depth selling to
reach as many buying participants as possible.
– their salespeople virtually “live” with their high-volume
customers
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By Philip Kotler, John Bowen and James Makens
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Major Influences on Organizational Buyers
Introduction
• Organizational buyers are subject to many influences
as they make buying decisions, and some vendors
assume the most important influences are economic.
• A study of buyers in ten large companies concluded
that emotions & feelings play a part in the decision.
• In reality, organizational buyers commonly respond
to both economic and personal factors.
– where there is substantial similarity in supplier offers,
price becomes an important determinant
– when competing products differ substantially, buyers are
faced with many decision variables other than price
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Major Influences on Organizational Buyers
Introduction
• The various influences on organizational buyers may
be classified into four main groups:
II
– environmental, organizational, interpersonal, individual
Figure 7-1 Major influences on business buying behavior.
Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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Major Influences on Organizational Buyers
Environmental Factors
• Organizational buyers are heavily influenced by
the current and expected economic environment.
• Factors such as the level of primary demand, the
economic outlook, and the cost are important.
• In a recession, companies cut their travel budgets,
whereas in good times, travel budgets are usually
increased.
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Major Influences on Organizational Buyers
Organizational Factors
• Each organization has specific objectives, policies,
procedures, organizational structures, and systems
related to buying.
• The hospitality marketer has to be as familiar with
them and wants to know…
–
–
–
–
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how many people are involved in the buying decision?
who are they?
what are the evaluation criteria?
what are the company’s policies & constraints on the
buyers?
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Major Influences on Organizational Buyers
Interpersonal Factors
• The buying center usually includes several
participants, with differing levels of interest,
authority, and persuasiveness.
II
– hospitality marketers are unlikely to know the group
dynamics taking place during the buying decision process
• Salespeople commonly learn the personalities and
interpersonal factors that shape the organizational
environment and provide useful insight into group
dynamics.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Major Influences on Organizational Buyers
Individual Factors
• Each participant in the buying decision process has
personal motivations, perceptions, and preferences.
• Age, income, education, professional identification,
personality, and attitudes toward risk all influence
the participant in the buying process.
II
– buyers definitely exhibit different buying styles
• Hospitality marketers must know their customers
and adapt their tactics to known environmental,
organizational, interpersonal, and individual
influences.
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Marketing for Hospitality and Tourism, Fifth Edition
By Philip Kotler, John Bowen and James Makens
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© 2010 Pearson Higher Education, Inc.
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Organizational Buying Decisions
Introduction
• Organizational buyers do not buy goods and services
for personal consumption.
II
– they buy hospitality products to provide training, reward
employees and distributors, and to provide lodging for
their employees
• Eight stages of the organizational buying process
have been identified and are called buyphases.
– this model is called the buygrid framework
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The Buygrid Framework
Stage 1 - Problem Recognition
• The buying process begins when someone in the
company recognizes a problem or need that can be
met by acquiring a good or a service.
II
– problem recognition can occur because of internal
or external stimuli
• Internally, a new product may create the need for a
series of meetings to explain the product to the sales
force.
• Externally, the buyer sees an ad or receives a call
from a hotel sales representative who offers a
favorable corporate program.
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The Buygrid Framework
Stage 2 - General Need Description
• Having recognized a need, the buyer goes on to
determine the requirements of the product and to
formulate a general need description.
• The corporate meeting planner works with others to
gain insight into the requirements of the meeting.
II
– they determine the importance of the price, meeting space,
sleeping rooms, food and beverage, and other factors
• Alert marketers can help buyers define their
companies’ needs and show how their hotel
can satisfy them.
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The Buygrid Framework
Stage 3 - Product Specification
• Once the general requirements are determined, the
specific requirements for the meeting can be
developed.
• Information often requested includes availability
of water, ceiling heights, door widths, security, and
procedures for receiving and storing materials prior
to the event.
• A salesperson must be prepared to answer their
prospective client’s questions about their hotel’s
capabilities to fulfill the product specification.
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The Buygrid Framework
Stage 4 - Supplier Search
• The buyer now conducts a supplier search to identify
the most appropriate hotels.
II
– the buyer can examine trade directories, do a computer
search, or phone familiar hotels
• Hotels that qualify may receive a site visit from the
meeting planner, who eventually develops a short
list of qualified suppliers.
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The Buygrid Framework
Stage 5 - Proposal Solicitations
• Once the meeting planner has drawn up a short list of
suppliers, qualified hotels are invited to submit
proposals.
II
– hotel marketers must be skilled in researching, writing
& presenting proposals
• Proposals should be marketing oriented, not simply
technical documents.
– they should position their company’s capabilities and
resources so that they stand out from the competition
– many hotels have developed videos for this purpose
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The Buygrid Framework
Stage 6 - Supplier Selection
• In this stage, members of the buying center review
the proposals and move toward supplier selection.
II
– they conduct an analysis of the hotel, considering
physical facilities, ability to deliver service, and
the professionalism of its employees
• In general, meeting planners consider the following
attributes in making their selection of a location:
–
–
–
–
sleeping rooms & meeting rooms
food & beverage
check-in/checkout & billing procedures
staff
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The Buygrid Framework
Stage 6 - Supplier Selection (cont.)
• The buying center may attempt to negotiate with
preferred suppliers for better prices & terms before
making the final selection.
• There are several ways the hotel marketer can
counter the request for a lower price.
II
– dates can be moved from a high demand period to
a need period for the hotel
– menus can be changed.
• The marketer can cite the value of the services the
buyer now receives, especially where services are
superior to competitors
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The Buygrid Framework
Stage 7 - Order-Routine Specification
• The buyer writes the final order with the chosen
hotels, listing technical order-routine specifications
of the meeting.
II
– the hotel responds by offering the buyer a formal contract
• The contract specifies cutoff dates for room blocks,
date when hotel will release the room block for sale
to other guests, and minimum guarantees for food
and beverage functions.
• Many hotels & restaurants have turned what should
have been a profitable banquet into a loss by not
having or enforcing minimum guarantees.
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The Buygrid Framework
Stage 8 - Performance Review
• The buyer does a postpurchase performance review
of the product to determine if the product meets the
buyer’s specifications and if the buyer will purchase
from the company again.
• It is important for hotels to have at least daily
meetings with a meeting planner to make sure
everything is going well and correct things that
did not go well.
• This manages the buyer’s perceived service & helps
avoid a negative postpurchase evaluation by the
buyer.
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Group Business Markets
Introduction
• One of the most important types of organizational
business is group business
II
– it is important for marketing managers to understand
differences between a group and a consumer market
– group business is often more sophisticated and requires
more technical information than the consumer market
• Many group markets book more than a year in
advance, and during this time, cognitive dissonance
can develop.
– marketers must keep in contact with the buyer to assure
them that they made the right decision in choosing the
seller’s hotel
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Group Business Markets
Categories
• The four main categories of group business are
conventions, association meetings, corporate
meetings, and SMERF.
II
– Social, Military, Educational, Religious, and Fraternal
organizations
• Conventions attract large numbers, but meetings
occur much more frequently than conventions.
–
–
–
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there are about ninety-five meetings for each convention
fifteen hundred people attend the average convention
165 people attend the average association meeting
78 people attend the average corporate meeting
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Group Business Markets
Considerations
• When choosing a hotel, an important consideration
for a is whether the hotel can house the participants.
II
– most hotels have the potential of attracting hundreds of
small meetings, where larger hotels can attract conventions
• Successful hotels know which groups to attract, how
to use group business to fill need dates & how to sell
groups on the hotel’s benefits rather than just price.
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Group Business Markets
CIC - APEX
• The Convention Industry Council (CIC) is made up
of thirty-four member organizations that represent
both buyers and suppliers to the meetings industry.
II
– they recently developed the Accepted Practices Exchange
(APEX), a set of standards and best practices to all parties
involved in the creation and implementation of a meeting
• APEX’s event specifications provide a checklist for
planning an event, and its glossary brings a common
meaning to terms used in the meetings industry.
– APEX is a great tool for those involved in selling or
planning meetings
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Group Business Markets
Conventions
• Conventions are a specialty market requiring
extensive meeting facilities.
II
– usually the annual meeting of an association, & include
general sessions, committee & special-interest meetings
• Hotels with convention facilities, such as the Chicago
Hyatt can house small and midsized conventions.
• Conventions that use a major facility, such as the
Jacob Javitts Convention Center in New York, often
have tens of thousands of delegates.
– called citywide conventions because hotels throughout the
city house their delegates
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Group Business Markets
Conventions
• There are almost 14,000 conventions held each year
in the US, with delegates staying an average of 3.6
days & spending an average $1,500 per event.
II
– of this amount about $350 is spent on lodging
• Associations usually select convention sites two to
five years in advance, with some large conventions
planned ten to fifteen years before the event.
• Some associations prefer to have their conventions in
the same city year after year.
– others move to a different area of the country each year
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Group Business Markets
Conventions
• A convention can be a major source of income for
the sponsoring organization.
II
– registration fees from attendees and sales of exhibition
space in the trade show are major sources of revenue
• The price that can be charged for exhibition space is
related to the number of attendees.
– an association looks for locations that will be both
accessible and attractive to members
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Group Business Markets
Conventions
• Convention planners listed the following as the most
important factors in choosing a destination:
II
– availability of hotels &facilities
– distance from attendees; ease & costs of transportation
– climate; recreation, sights & cultural activities
• The most important attributes of the hotel:
–
–
–
–
–
meeting rooms & sleeping rooms
food & beverage quality
exhibit space & support services
negotiable rates; billing procedures
check-in/checkout; staff assignment; previous experience
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Group Business Markets
Conventions
• Food quality is very important to convention planners.
– attendees will talk about exceptional banquets, out-ofthe-ordinary receptions & unique coffee breaks
– poor food and service can generate negative feelings
about the convention among the participants
II
• Support services must be available when needed.
– a nonfunctioning DVD player must be repaired/replaced
quickly to ensure the presenter’s flow is not interrupted
• Billing procedures are important to planners.
– meeting planners want a bill that is understandable, accurate,
and delivered in a timely manner
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Group Business Markets
Convention Bureaus
• Convention bureaus are nonprofit marketing
organizations that help hotels sign conventions &
meetings.
II
– often supported by a hotel or sales tax & run by chambers
of commerce, visitor bureaus, or city/county governments
• A hotel relying on meeting business for a significant
portion of its occupancy should have a good working
relationship with the convention bureau.
– which includes active membership in the organization
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Group Business Markets
Association Meetings
• Associations sponsor many types of meetings.
– regional, special-interest, educational, and board meetings
II
• 71,000 associations, 92% of which hold meetings,
creating 227,000 association meetings annually.
– generating meeting business valued at $70 billion
• Important destination attributes for an association
meeting planner are availability of hotel & facilities,
ease of transportation, distance from attendees, and
transportation costs.
– unlike conventions, climate, recreation & cultural activities
are not as important as the meeting itself is the major draw
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Group Business Markets
Association Meetings
• In selecting a hotel, the association meeting planner
looks attributes similar to the convention planner.
II
– except for exhibition space
• For the association meeting planner, food and
beverage are the most important attributes.
• Membership in the American Society of Association
Executives (ASAE) is beneficial for hotels actively
pursuing association business.
• Members attend association meetings voluntarily,
so the hotel should work with meeting planners to
make the destination seem as attractive as possible.
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Group Business Markets
Corporate Meetings
• A corporate meeting is a command performance.
– employees are directed to attend without choice
II
• Because corporations do not have to develop and
implement a marketing plan to gain attendees, they
often plan meetings with a few weeks’ lead time.
• About 800,000 corporate meetings are held with an
average expenditure exceeding $36,000 per meeting.
– corporate meetings are smaller than association meetings
• When seeking business from corporations, a hotel
manager must understand who has the responsibility
for booking meetings.
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Group Business Markets
Corporate Meetings
• The corporation’s major concern is for a productive
meeting that accomplishes the company’s objectives.
II
– types of corporate meetings include training, management,
planning and the incentive meeting
• To a corporate meeting planner, the most important
attributes in the choice of a destination are the
availability of hotels, ease of transportation,
transportation costs, and distance from the attendees.
• Hotels interested in capturing and retaining corporate
meeting business must make sure that meeting rooms
are adequate and set up properly.
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Group Business Markets
Corporate Meetings
• Hotel salespeople must develop an understanding of
the client’s corporate culture to gain insight into
benefits the hotel can offer.
II
– some companies feel meetings should be austere, rather
than lavish
– others view meetings as a time for employees to relax
& enjoy themselves, a well-deserved break
• Companies that believe meetings should educate &
rejuvenate employees, and build enthusiasm toward
the company are willing to spend more money on
food & beverage, entertainment, and hotel facilities.
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Group Business Markets
Small Groups
• Although small in terms of number of participants,
thousands of small meetings are held every month.
• Hotels & chains have developed special packages
for small meetings, often overlooked by large hotels.
II
– upscale hotels such as the L’Ermitage in Beverly Hills go
after executive meetings where expense is not a problem
– Sheraton has also developed executive conference centers
for board meetings, strategic planning sessions & training
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Group Business Markets
Small Groups
II
• Simplifying small meeting
arrangements is critical
because those who plan
small meetings are often
not meeting planners.
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Group Business Markets
Incentive Travel
• Incentive travel, a unique subset of corporate group
business, is a reward participants receive for
achieving or exceeding a goal.
II
– for both individual and team performance
• A hotel salesperson selling incentives must be able
to help their client justify the expenditure.
– percentage of sales of the attendees is an excellent way
• Because travel serves as the reward, participants
must perceive the destination & hotel as special.
– climate, recreational facilities, and sightseeing
opportunities are high on an incentive planners’ list
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II
See this feature on page 186 of your textbook.
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Group Business Markets
SMERFs
• SMERF stands for Social, Military, Educational,
Religious, and Fraternal organizations.
II
– median 485 nights at a budget of $180,000
– in the US, over 50,000 religious organizations have group
travel programs
• The individual pays for the majority of the functions
sponsored by these organizations, and sometimes the
fees are not tax deductible.
• Participants usually want a low room rate & often
find food & beverage within the hotel too expensive.
– SMERFs can be flexible to ensure a lower room rate
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Group Business Markets
SMERFs
• Because attendees are price sensitive, a challenge is
to get them to book within the room block.
II
– due to Internet searching for lower rates at the same hotel
• Hotels often provide concessions like free rooms or
a free or reduced food & beverage function based on
the number of room nights in the group’s block.
– if the block does not materialize, the meeting planner is
responsible for extra charges
• SMERFs provide good off-peak filler business.
– those new to hotel sales often start with SMERF markets
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Group Business Markets
Segmentation of Group Markets by Purpose
• Group markets also can be broken into the purpose
of the meeting, and Table 7–1 on page 188 shows
a matrix describing some of the critical sales
decision variables for these types of gatherings.
• This matrix reflects the general nature of sales
decision variables within the group market.
II
– exceptions can and do exist
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Group Business Markets
Restaurants as a Meeting Venue
• Restaurants are designing their space to take
advantage of meetings and meetings of 50 people
or fewer can be a great source of business.
• A room off of the main room that can be closed off
for meetings gives the restaurant the option of using
it as part of the public dining space on Saturday night
or a meeting room during a weekday.
II
– meetings held in space of 700 square feet or less (20 x 35
feet) increased by over 25 percent in the past two years
• Many times they are held at off-peak times, such as
during a weekday.
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Dealing with Meeting Planners
Negotiating
• When negotiating with meeting planners, it is
important to try to develop a win-win relationship.
II
– meeting planners like to return to the same property
• Discussions over price can drive the planner and
hotel sales executive apart, or bring them together
– a negotiating technique is to determine group requirements
in detail and work out a package based on needs & budget
• Some planners try to negotiate every item separately,
starting with the room rate, then they choose a $65
banquet and try to negotiate the price to $45.
– every line item becomes a point of contention
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Dealing with Meeting Planners
Negotiating
• A consultative approach is much more effective.
– if the hotel knows the planner wants to spend $50 for
dinner, the chef can develop alternatives in this range, the
hotel can produce the meal at a profit and sell it for $50
– the hotel gains a profitable meeting, and the meeting stays
within the planner’s budget
II
• If attendees are able to get work done at the
conference they will stay longer.
– the hotel can offer a small meeting room with business
services, including Internet access, computers & printers
– this can be a low-cost item to the hotel that has a high
value to the meeting planner
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Dealing with Meeting Planners
Negotiating
• Hotel salespersons must remember that most group
rates are noncommissionable
II
– if the rates are to be commissionable, it should be
determined during the negotiation process
• Meeting planners sometimes turn meetings over to
travel agents, who book about 5 percent of all
corporate meetings.
– if the planner does so without understanding the rate is
noncommissionable, problems can arise when the travel
agent tries to collect a commission
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Dealing with Meeting Planners
Negotiating
• It is also common to give one complimentary roomnight for every fifty room-nights that the group
produces—another point of negotiation.
• A smaller meeting room the hotel will not be able to
sell during a proposed meeting can be used in the
negotiation process as a boardroom or a space for
the meeting manager to work.
• The hotel salesperson must look for items that will
create value for the meeting planner without creating
costs or sacrificing revenue for the hotel.
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Dealing with Meeting Planners
Negotiating
• Many associations have a president, elected from the
membership, and a professional executive, often
called the executive vice president.
II
– the executive vice president usually sets up the meeting or
supervises a meeting planner
• It is important for the salesperson to find out who is
involved in the decision-making process, officially
and unofficially.
– gatekeepers can give useful insights into the decisionmaking process within the organization
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Dealing with Meeting Planners
Negotiating
• When the vice president of sales asks a junior
salesperson to organize a sales meeting, the
salesperson is usually unsure of how to proceed.
• Meeting administrators often know the business as
well as the hotel salesperson.
II
– salespeople should listen to the administrator to
understand his/her requirements
• Sometimes they know exactly what they want and
just need a quote according to their specifications.
– if this is the case, trying to alter their specifications
arbitrarily can appear unprofessional and lose business
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Dealing with Meeting Planners
Negotiating
• Most meeting planners maintain a history of the
group for the purpose of planning future meetings.
II
– a salesperson can gain valuable information by asking
questions about past conferences
• In addition to information volunteered by the
meeting planner, the salesperson should interview
hotels that hosted the conference in past years.
– this can provide insight into room pickups, banquet
attendance, past problems & what members enjoyed
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Dealing with Meeting Planners
Negotiating
• Meeting planners want their calls returned the same
day they are received.
• When they ask about availability of meeting space,
they expect a response the same day and a complete
proposal in five days.
• Most meeting planners want their bill within one
week of the event; 25% want it within two days.
• Planners feel hotel management should empower the
convention service manager to solve their problems.
– they do not want to wait while the convention service
manager checks with a superior
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Dealing with Meeting Planners
Prefunction Meeting
• A most important aspects of creating a successful
function is a prefunction meeting between the hotel
staff and the meeting planner before the function.
– Accounting should be at the meeting to get acquainted
with the function to make sure billing meets expectations
– the Bell Captain should know if a gratuity is included
– the concierge needs to know the meeting has open nights
with no banquets to allow the concierge to set aside tables
at local restaurants
– hotel staff that will be receiving questions about the event
and the schedule should be briefed
– reservations agents should know the names of the group’s
VIPs and who should get early check-in privileges
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Corporate Accounts and Travel Managers
Corporate Rates
• A nongroup form of organizational business is the
individual business traveler.
II
– most hotels offer a corporate rate, intended to provide
an incentive for corporations to use the hotel
– most hotels offer it now to any businessperson who
requests the corporate rate
• To provide an incentive system for heavy users,
hotels developed a second set of corporate rates.
– the contract rate is a negotiated rate, usually 10% to 40%
percent below the hotel’s rack rate and often includes
benefits besides a discounted rate
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Corporate Accounts and Travel Managers
Corporate Rates
• The corporate business traveler is a sought-after
segment, as while the corporate contract rate is a
discounted rate, it is higher than the group rate.
II
– the business traveler is also on an expense account and
makes use of the hotel’s restaurants & business facilities
• Companies that would have not considered putting
their people in an economy brand a few years ago
are now using budget and economy-brand hotels.
– budget/economy hotels now have a 34.5% market share
– attributed to upgraded amenities found in economy hotels
and businesses needing to cut costs to remain competitive
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Corporate Accounts and Travel Managers
Corporate Rates
• Larger companies have travel management programs
run by the company or in-house branches of a travel
agency that negotiate corporate hotel contracts.
• In addition to developing hotel contracts, the travel
managers set per diem rates, specifying the amount a
company traveler can spend on food & beverage.
II
– often at different levels, with the per diem amount
increasing as one moves up in the corporation
• It is important to find out a company’s per diem rates
to determine if the hotel is in the right price range.
– and what level of manager the hotel can expect to attract
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Corporate Accounts and Travel Managers
Corporate Rates
• Some corporations use in-house travel agencies, or
in-plants, that also represent other corporations,
providing the advantage of negotiating leverage.
• A business represented through an in-plant may have
only 100 room-nights a year in New York.
II
– the travel agency represented by the in-plant may service
ten companies with 1,500 room-nights in New York
• The agency can negotiate a rate based on the 1,500
room-nights & pass it along to individual companies.
– the hotel compensates in-plants by straight commissions,
monthly fees, or a combination of a fee and commission
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KEY TERMS
• Buying center. All those individuals and groups
who participate in the purchasing and decision
making process and who share common goals
and the risks arising from the decisions.
• Convention. A specialty market requiring extensive
meeting facilities.
• Corporate meeting. A meeting held by a
corporation for its employees.
• Derived demand. Organizational demand that
ultimately comes from (derives from) the demand
for consumer goods.
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KEY TERMS
• General need description. Stage of the industrial
buying process in which a company describes the
general characteristics & quantity of a needed item.
• Incentive travel. A reward that participants receive
for achieving or exceeding a goal.
• Order-routine specification. The stage of the
industrial buying process in which a buyer writes
the final order with the chosen supplier(s), listing the
technical specifications,quantity needed, expected
time of delivery, return policies,warranties, etc.
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KEY TERMS
• Organizational buying process. The decision
making process by which formal organizations
establish the need for purchased products and
services and identify, evaluate, and choose among
alternative brands and suppliers.
• Performance review. The stage of an industrial
buying process in which a buyer rates its satisfaction
with suppliers, deciding whether to continue, modify,
or drop the relationship.
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KEY TERMS
• Problem recognition. The stage of the industrial
buying process in which someone in a company
recognizes a problem or need that can be met by
acquiring a good or a service.
• Product specification. The stage of an industrial
buying process in which the buying organization
decides on and specifies the best technical product
characteristics for a needed item.
• SMERF. Social, Military, Educational, Religious &
Fraternal organizations - specialty markets with a
common price sensitive thread.
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KEY TERMS
• Supplier search. The stage of the industrial buying
process in which a buyer tries to find the best vendor.
• Supplier selection. The stage of the industrial
buying process in which a buyer receives proposals
and selects a supplier or suppliers.
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EXPERIENTIAL EXERCISES
Try the Following !
• Talk with someone who travels for business.
Ask them if they can choose their own hotel and
airline when they travel for their company.
II
– if they can choose their own hotels and airlines, ask
if they have any restrictions or guidelines.
– if they are not able to choose their own hotels and
airlines, ask if they have any input into where they
stay.
• How would this information help you market
travel products to their organization?
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INTERNET EXERCISES
Try This !
Support for this exercise can be found on the Web
site for Marketing for Hospitality and Tourism,
www.prenhall.com/kotler
• Go to the Internet site of a travel organization. Do
they have a separate section for organizational or
group purchases?
• If so, how does the information in this section differ
from their consumer site?
• If they do not have a separate site, go to another
organization until you find one that has a separate
site for group or organizational purchases.
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END
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