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Corporate buyers to use alternative negociations

In a buyer's market, some techniques of contracting hotel rooms are back on line. For example, the Bayer pharmaceutical group began its reverse auction strategy in 2008 with a pilot program in the company's largest market. Through the auction and cutting the number of preferred properties, Bayer cut about $50,000 in travel spending. This year, Bayer expanded the strategy to two additional markets and drove an additional $400,000 in savings. Accordint to Purchase Manager Paul Lang: “Most of the work came before the auction. Mteam personally visited 14 hotels in the cities, spending at least an hour with each to explain the process”. Lang grouped the properties by tier - also checking with the hotels to make sure they were comfortable with their tier grouping - and told them the rates would include a full breakfast and high-speed Internet access. Those hotels that opted to provide continental breakfasts instead of full breakfasts were weighted accordingly, and hotels also were weighted by their distance from the location Bayer needed. The actual auction lasted less than an hour, with Bayer selecting three hotels out of the 14. The one thing Lang said he would do differently is better define last-room availability in the pre-auction discussions rather than leave the definition up to the hotels.

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