Healthy Business Travel Climate = Time to Focus on Your Hotel Program

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.

 

 

Become a Data Diva: It Makes all the Difference in Hotel Sourcing Season

by Suzanne Neufang

August 8 – HRS has long advocated that corporate travel managers have irrefutable data before they sit down and cut deals with hotels, whether it’s for a system-wide program or just specific properties in a single destination. As the 2018 RFP season gets underway…and we see mixed economic signals impacting global economies and hotel suppliers…that guidance looks to be spot on.

Here’s the good news; the U.S. economy features a robust stock market (surpassing 22,000 for the first time last week), consistently high monthly new job figures, and an environment where the hospitality segment is hiring more than many other sectors. IATA reported that global air travel grew by 7.9 percent over the first six months of the year: it’s easy to conclude that many of those travelers slept in a hotel during their journey. On the hotel chain front:

But here’s the bad news: TravelClick’s latest report noted that U.S. hotel bookings in the business transient segment are down 3.8 percent for the third quarter, and group occupancy is down more than five percent from last year. Analyst John Hach said that their data “predicts a prolonged decline” in most North American markets. GBTA notes that global business growth is projected to top five percent both this year and next….but all projections come with a caveat tied to the unpredictable political scene in nearly every region on the planet (see GBTA graphic below).

So…what can a travel manager do as they try to shape a relevant lodging forecast for the next six months to a year?

Like many things, the answer lies in staying focused and leveraging irrefutable benchmark and program data, coupled with keen insight on the company’s business goals. Showcase the value which a managed hotel program brings: the ability to drive spend and traffic to preferred properties, and leverage other discounted rates when it makes sense. Take the right steps, and workable metrics can be in reach.

Increase your odds for better outcomes – both in the short term and long term – by working with experts on rate trends, projections, and execution. Don’t underestimate the value of on-the-ground expertise as you consider new markets for your travelers.

Sure, reports and projections drive a lot of headlines. Successful benchmarking, sourcing and ultimate execution, however, is the final proof for lodging program success which every CFO appreciates.