Most BC Housing Programs Are Ineffective Pre Arranged Guaranteed Deployment Housing for Critical Staff: Making Your Resilience Plan Robust Michelle Lowther Principal Continuity Housing Companies cannot differentiate themselves Contingency contracts provided by hotels typically offer no firm guarantee What we want We call hotels in advance; they agree to everything on our wish list They ll have all the rooms we ll ever need They ll be ready whenever we need them They ll give us the rooms at a discount We don t have to commit to anything! What Hotels Hear Goals for Today I d like something for nothing, please. Understanding the housing component of your BC/DR plan Case studies Things to consider when choosing hotels How hotels view your RFP (request for proposal) Negotiating hotel contracts Best practices Q&A 1
The Fact Is The Housing Component Unless your critical personnel have a safe place to stay while assisting in continuity and recover efforts, business can suffer, morale can suffer, and your plan goes out the window. What About You? How far in advance do you deploy & what are the parameters? Who at your organization handles housing, and what is their degree of expertise in this area? How long does it take to put together the rooming list, handle contracts, get confirmation numbers to employees, etc.? What About You? How many people handle this task for your company? How many hours spent? Hard cost of that? Soft cost of productivity loss? Opportunity cost for the learning curve? 2
Case Study #1 Case Studies DEEPWATER HORIZON SPILL RESPONSE Large scale event with little to no advance warning No housing protocol in place Hotels not eager to negotiate due to the spike in volume we created Competing with ourselves for availability Best practices Contracting for short periods of time to minimize financial risk Provision to renegotiate rates and terms for extended stay Early out clauses Daily room block audits and monthly invoicing Case Study #2 2008 HURRICANES GUSTAV & IKE MAJOR US BANK Large scale event with significant advance warning Needs 200 rooms (includes both responders and families) Housing protocol Internal travel department to negotiate with each individual hotel at the time of a crisis Actual housing procedure Case Study #2 Still securing group blocks of rooms when responders were already on the road Scrambled to collect rooming list data because they didn t gather it in advance How to communicate to these responders? Travel function was outsourced to a travel management company, and not all agents would work 24/7 Signed contracts on the fly Not possible to negotiate most advantageous terms at the last minute Difficult to find someone with proper signing authority within the structure of this large company, which posed a risk of losing rooms 3
Case Study #2 Lots of issues once people were on site Shuttle service Catered food Pets Moving people to different hotels and keeping track of those moves Invoices were a nightmare Cost 12 people working full time for 5 weeks on these 2 deployments Had to stand up a hotel hotline for employee questions Spent $3 million over the 2 deployments combination of lodging, per diem and travel expenses. Things to Consider When Choosing Hotels THAT S $1,000 PER ROOM PER DAY Things You Already Consider Location (proximity to DR site) Price (what s included?) Contract terms ADA accommodations Proximity of restaurants Shuttle service (especially to DR site) Room facilities (Kitchenettes? Suite product?) Things You Should Also Consider Pet policy Average historical occupancy/seasonality Business mix (group vs. transient) Transient booking window Ratio of kings to double/doubles Existing relationships (using hotels in your travel program) Rate range (quote up front!) Hotel s competitive set 4
How Hotels View Your Business How Hotels View Your Business Definitions Room nights (A room night is a perishable good!) Pattern Volume Your budget Contract terms Credit worthiness Potential for repeat or other future business Existing relationship Ancillary revenue streams Displacement of other business It All Comes Down to This! RFP Tips Be detailed and thorough from the outset Anticipate their questions, and have the answers Give them a realistic decision timeline Consider a multi year contract 5
RFP Tips Make it as attractive for the hotels as possible Nothing that would displace other business Organized program that s turnkey for them (consider a standard contract) Fair expectations with contract terms and concession requests Negotiating Hotel Contracts Find out how many similar agreements the hotel has in place Make sure they know whom they re competing with Contracts: More Flexible Than You May Think Attrition Key Terms in Hotel Contracts Cancellation First right of refusal as long as you know where to look! No early departure fees Provision to renegotiate rates if block changes significantly 6
Key Terms in Hotel Contracts Billing instructions Mutual indemnification Successors & assigns Best Practices Concessions Best Practices Select hotels that maximize resell potential Shortest transient booking window Largest transient mix Highest historical occupancy Smaller blocks spread across multiple hotels (maximizes resell and minimizes displacement) One standard contract signed by all hotels in your program Provide your own contract rather than using each individual hotel s If the contract doesn t answer What if? for every likely scenario you can create, go back to the drawing board! Best Practices Pre negotiate contract terms Use of first right of refusal clause Contracting for short periods of time to minimize financial risk Provision to renegotiate rates and terms for extended stay Early out clauses Daily room block audits and monthly invoicing Success depends on open, consistent communication with your hotel contacts and the strength of your relationship. 7
Thank you! Michelle Lowther Principal, Continuity Housing Michelle@ContinuityHousing.com 8