by Suzanne Neufang
We’ve arrived at the fourth quarter, and prognostications for hotel rates in 2017 are starting to unfurl. Several respected entities have already published their forecasts. NYU’s Bjorn Hansen projects increases between 3-4 percent in the U.S.; Advito sees increases averaging as high as five percent. These type of “blanket” average forecasts often color RFP seasons that are, in many cases, just getting underway.
Given the rate increases most companies have absorbed over the past two years, most travel managers are – for a change – looking forward to the coming year, as the tables appear to be turned in their favor. Statistics from TravelClick for the third quarter that just wrapped revealed that transient business bookings at hotels in North America dropped nearly 5 percent from 2015; math like that illustrates the timing and opportunity for travel buyers as they engage in negotiations for next year.
While those 3-5 percent projected increases are already good news for corporate travel programs that often endured double-digit leaps in some markets in 2014-15, the reality is that there are significantly better deals to be had in some key business centers. Cities like New York (due to the addition of new supply) and Houston (oil industry uncertainty) can present scenarios – for the program that has its data locked down and a cohesive strategy – where rates can be kept flat with key hotel partners.
Fresh reports showing results like the ones quoted by TravelClick are likely in the weeks ahead as leading chains report on their third quarter performance. For travel managers in the midst of 2017 RFP negotiations, these next few weeks call for you to aggressively leverage your volume and cut deals with hoteliers who will be that much more anxious to lock in volume for 2017.
More North American travel programs are sensing this environment and looking to our HRS experts to take advantage of this opportunity. We’ve tripled the number of hotel sourcing clients from our initial client roster in 2015; programs cumulatively managing more than $800 million in annual lodging spend are working with HRS to negotiate their 2017 programs. We’ll write more in this space about trends we see at the negotiating table across our variety of clients as the fourth quarter progresses.