The hotel spend category is firmly in the spotlight as tactics to maximise it are many and varied.
Containing costs on accommodation is a major driver for corporates and it rests on accessing the richest content to satisfy all their travellers to improve compliance. That content might be an apartment in Dubai, a B&B in Scotland or a four-star hotel in Singapore. Wings aggregates content from the GDSs and non-GDS channels to offer as wide a choice as possible.
Full hotel content is only part of the picture; finding the best rate each time is of equal importance as, at first glance, a rate on an OTA may look more attractive but inevitably, it comes without traveller tracking, CSR or duty of care.
“It’s a minefield of content out there,” says Catherine Tiew, Travel Consultant for Wings in Singapore. “We’ll do what’s right for the clients as time and volume are our constraints.”
In such a fragmented hotel market it takes time, energy and expertise to find the right deal. “We get cost-effective deals for our clients by looking at a wide range of channels for hotel content,” says Tiew.
Moreover, the hotel market has been changing rapidly. Hotels have been moving away from a static rate for a 12-month period to offer a dynamic rate based on best available rate (BAR). It means that today, hotel inventory looks more like the highly-discounted, non-refundable fare types commonly seen in airline inventory. But BAR rates could be as little as a 4% discount so Wings advises to stick with the status quo.
“I always recommend my clients opt for a flat, negotiated rate for the whole year,” says Chris Martin, VP Business Development Americas for Wings Travel Management. “This gives the travel manager a clearer idea of their hotel spend in their key markets and helps forecasting and budgeting. I would also recommend my client to accept a slightly higher rate in favour of LRA (Late room availability) as this not only guarantees availability but also the negotiated rates during busy periods at their preferred hotels.” This does not preclude clients being able to take advantage of lower dynamic rates or plug into tactical promotions. “Hotels are pushing for BAR rates but I haven’t seen any evidence that it works any better,” adds Tiew.
One constant in this ever-changing marketplace is the rule of supply and demand, and if there is a better rate available prior to departure a Wings consultant will find it and re-book. Tiew reckons that around 5% of bookings are re-booked in this way.
“Many soft benefits can be negotiated, the most common being better cancellation terms, breakfast, early check-in, and a shuttle bus service”
Where a client’s bed nights are is also a factor. One hundred bed nights in a secondary city will trigger a better discount and soft benefits compared to say, the same number in a major world city such as New York.
Having said that, some hotels actively look to SME business to lower their risk of being too dependent upon the big global players. IHG and Accor, for example, have a relatively low spend for entry into their chain discounts.
Hotels’ sophisticated revenue management software ensures that discounts are offered only in low-demand periods or on quieter days of the week, so if the client can switch from a Tuesday booking – usually a hotel’s busiest night – to a Thursday or Sunday, there is probably a deal to be had. “That’s part of the
negotiation on a fixed rate deal,” says Richard Turpin, Director of Account Management & Client Consulting UK & Europe for Wings.
Furthermore, hotels will also welcome clients if they can offer a spread of business, embracing meetings, food and beverage outlets and room nights. For this reason, it makes sense to leverage transient and meetings volumes into the same venue.
Many soft benefits can be negotiated, the most common being better cancellation terms, breakfast, early check-in, and a shuttle bus service. “Occasionally we get free car parking or laundry service and space-available room upgrades,” says Turpin. ”If the hotel wants to keep that corporate happy it doesn’t cost them much to offer these benefits if the hotel is empty anyway.”
Typical is the Wings deal from Mandarin Oriental, which includes breakfast, amenity kit, room upgrade, allowance for food and beverage, spa usage, wi-fi and a personalised welcome. “It’s the sort of deal we get from other hotel groups and is perfect for senior-level travellers,” says Turpin.
Introducing a rate cap in key destinations such as New York, Moscow, Hong Kong and London, is another cost-saving strategy as it gives back choice to the traveller and has the knock-on effect of improved compliance levels. The traveller can choose to luxuriate in a 5-star hotel outside Houston and commute in, or downgrade to a budget hotel downtown.
Turpin reckons rate caps make travellers think twice before booking but is also conscious that clients are mindful of traveller wellbeing.
“There’s a moral argument for using rate caps,” he says. “Corporates want to keep travellers happy and productive so they grapple with quality vs cost more and more as they know that travel takes its toll on their employees.”
Having a clearly written travel policy also helps compliance as it avoids any friction between what the traveller wants and what the company wants to achieve. “I would always recommend that a travel policy is written in consultation with key stakeholders,” says Tiew.
She is cognisant of the sometimes delicate issue of keeping to policy for senior travellers in particular. “They know what they like and have a certain status and want to stay at the Carlyle in New York that night and be treated like a king, so it can be difficult to mandate hotel usage.” Very often clients will have to create a two-tier policy to accommodate different rate caps for different employees.
Deep-diving into hotel data can bring rewards too. If a new project has introduced new travel patterns then it will trigger the need for new hotel negotiations. One thing is clear, doing a deal and leaving it for 12 months is not realistic.
Advance booking can reap rewards if clients can change traveller behavior to book 14-21 days out. Joining corporate hotel loyalty schemes offers cost benefits too as points accrued can be redeemed for free stays, for example.
Ultimately each client must decide how to best manage hotel spend. Not travelling may be an option for one, or better meetings management may work to maximise time on the ground for another. Air spend may comprise the bigger chunk of travel spend but it’s time for clients to focus on hotel spend as it can bring rich rewards to the bottom line.
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HOW TO SAVE ON HOTELS
- The working week is Saturday to Wednesday, 8am-1pm, then 4-7pm
- Take a higher rate which includes LRA
- Fixed rate deals may work better for you than a dynamic rate
- Check rates up until day of departure
- Switch bookings to lower demand periods or quieter days of the week
- Consolidate and offer a wider spread of business to fewer hotels
- Introduce rate caps in major cities
- Have a clearly written travel policy
- Be aware of new contracts which may trigger new negotiations
- Encourage travellers to advance book
- Join corporate hotel loyalty schemes to reap benefits