By Suzanne Neufang
Some positive industry metrics have come to light in recent weeks. According to the International Air Transport Association, worldwide air travel demand increased by 9.5 percent year-over-year in March, the fastest monthly pace in the past year. Amadeus reported that first-quarter bookings through the world’s largest Global Distribution System (GDS) rose 3.4 percent in the first quarter, sparked by “better than expected” airline booking growth. Sabre, the dominant GDS in North America, saw its bookings surge by 6 percent. Sabre’s CEO said “Corporate travel continues to improve.”
All of these business travelers need a place to sleep at night! Accordingly, we’re seeing the largest global hotel chains report growth metrics. Marriott’s first quarter net income rose seven percent year over year, with the world’s largest chain adding more than 14,000 rooms to its inventory, including 5,800 outside of the U.S. IHG saw a 4.3 percent increase in revenue-per-available-room, and they added 8,000 rooms to their portfolio in anticipation of more volume.
So what does this mean for procurement leaders keeping their eye on optimizing lodging expenses?
If you managed to source a fair, flat rate with your preferred hotel partner(s) that will run through the entire calendar year or into 2019….good for you. The foresight to lock in rates should serve your program well at a time when demand appears to be on the rise.
If you lean on dynamic pricing or operate your program with percentage discounts based on “best available” rate….now is the best time to get the magnifying glass out and see what options you have. With air travel increasing, positive economic growth in most countries, and consolidation still taking place, hoteliers are likely to take steps to increase their yield and are apt to boost rates in cities with high demand.
Corporate hotel programs can counter these moves by being smart with the volume they offer to hotel suppliers. Keep an eye on the room nights your travelers book at both preferred and non-preferred hotels….these metrics may open avenues to savings if you can steer more travelers to specific brands / properties. You may also find savings by revisiting ancillary items in hotel contracts like breakfast and WiFi, two oft-overlooked items that can drive unnecessary incremental spending.
Finally, if you are among the many hotel programs that are not yet familiar with Continuous Sourcing (42 percent, according to the ACTE Hotel Sourcing White Paper released last month), now is the time to get acquainted with this money-saving option. Early adopters of Continuous Sourcing recorded both savings and increased traveler satisfaction (see below chart). Continuous Sourcing also gives you flexibility for environments just like this one, when you truly need to manage your volume and work closely with your most preferred supplier partners.
Continuous Sourcing Benefits
ACTE Sourcing White Paper – April 2018
HRS is a leader in leveraging Continuous Sourcing for programs at the forefront of this new approach. Through our development of expedited sourcing techniques, we are redefining hotel procurement and accelerating processes that save companies both time and money. HRS is educating clients about Continuous Sourcing strategies, and putting them to work in cities in the Americas, Europe and Asia-Pacific. Reach out to your regional HRS contact to learn more about how HRS’ broad portfolio of services – including Continuous Sourcing – can help you optimize your program at a time when rates and fees are on the rise.