Has the time come for “convergence?” The idea of aggregating all a company’s spend with a hotel operator – hotel nights, meetings, food and beverage and more – is not new. But in the travel surge that followed the pandemic, another category has gained attention: The so-called bleisure, or blended travel spend added onto a business trip can contribute to overall volume, however indirectly.

Still, while some in the travel industry believe combining spend categories may be gathering steam with new technologies and better data, others are wary of how aggregation can be measured and deployed in the negotiating process.

A report last year from GBTA and sponsored by HRS called, The Power of One: How breaking down silos can drive value in converged program management, more than half of the respondents cited potential gains from consolidated data (70 percent), greater discounts/price mitigation (66 percent), process efficiencies (57 percent) and RFP time savings (57 percent).

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However, only one in five travel managers (22 percent) said their company’s travel and meetings programs are mostly integrated. A larger number (41 percent) said the two programs mostly work in siloes. While companies have work to do to consolidate travel and meetings, according to the report, the potential benefits make the effort worthwhile.

“The time has certainly come for convergence,” says Will Pinnell, senior vice president and managing director for the Americas for HRS. When he asks travel managers about their hotel volume, Pinnell says they typically provide their transient business and numbers that come from their TMC that may or may not include leakage, small and large meetings or extended stays. The reality, he says, is that most buyers don’t have a good handle on how much they are spending on hotels.

Blended in the Mix
Bjorn Hanson, adjunct professor, New York University's Jonathan M. Tich Center of Hospitality, says that phrases like “incremental,” “add-on” and “stayover,” as well as “accompanying persons” have been part of corporate travel and group/convention negotiations since he started researching corporate rates in 1990.The receptivity by hotels to those “added on” expenses in negotiations has varied over time, he says, depending on national or regional occupancy levels and pursuit of incremental revenue.

At Hilton, convergence has been something that has been talked about for awhile, says Christiane Cabot-Bini, vice president, global business travel sales. But the subject has come more to the forefront lately. She notes that hospitality is an industry where similar ambitions often look simple on paper but are slow to find acceptance. The reality of a corporation getting its arms around all of its spend, says Cabot-Bini, is not that easy, although some companies are doing it.

“Like anything in our industry,” says Cabot-Bini, “most companies are on a journey, in different stages of moving toward a place where they can talk about their spend holistically.”

Rich Johnson, senior director, CWT Solutions Group, says that while the company focuses on room nights, it acknowledges other expenses such as food and beverage, laundry and parking. Although these added costs aren’t directly included in negotiation metrics, he says, they do influence decisions, albeit to a lesser extent than room nights.

Cameron Spence, global hotel practice line lead, American Express Global Business Travel, says that when clients have identified clear objectives in driving further spend into a property, Amex GBT would look to include those factors in the negotiation process. Where applicable, Spence continues, “we can also bring in information surrounding spend from other travel categories such as air, should it help to highlight the levels of demand a destination can expect to see.”

With all the talk and research around convergence, it’s hard to say how much momentum the idea is gaining. Says Spence, “We are not currently negotiating rates that include blended travel per se.” Certain suppliers do offer “vacation schemes,” he says, in which they provide a dedicated booking code or portal to employees of an organization to benefit from discounted rates on their personal travel. However, these conversations are separate from corporate negotiated rates and are typically provided by suppliers as an additional perk, with the aim of drawing more appeal to their brand.

Alexis Sisko, managing consultant for BCD Travel’s Hotel Solutions, says that clients are aware that “bleisure” travel is a trend that is here to stay, but they’re not quite ready to update their policies to support the integration of leisure into their travel programs or sourcing strategies. Some of the hesitation stems from the impact of increased agency transaction costs, she says, but duty of care is also a key consideration.

Metric Challenges
A significant obstacle to convergence is the complexity of measuring spend; that may be particularly true of blended travel. Wendy Ferrill, vice president, worldwide sales for BWH Hotel Group, says it’s impossible to differentiate business and leisure travel “mainly because travel patterns are less traditional today.” In the past, says Ferrill, “a guest would check into a hotel dressed in a suit and it would be clear they were on a business trip. The difference between business and leisure travelers is much less apparent now. We cannot see what the traveler expenses back to their company nor what would be considered personal as we are not privy to that data.”

Tracking bleisure spend can prove challenging, agrees Spence. In part this is due to the fact that when an employee decides to add personal travel onto their business trip, the hotel component is often covered at the employee’s personal expense. That is different from air travel, he says, when the request does not usually involve additional costs but is simply about moving outbound flights earlier or return flights later.

One challenge of measuring blended travel – whether it involves mixing business and leisure stays or including different aspects of a business trip – is the complexity of payment arrangements, says Patrick Pahlke, chief commercial officer for Sage Hospitality Group, a management company specializing in lifestyle hotels. For example, Pahlke points out if an employee embarks on a five-night trip but only two nights are for business purposes, allowing them to book all five nights creates complications. “We need a system,” he says, “to ensure they only expense the proper percentage (in this case, 40 percent) related to business, with the remaining nights covered personally.”

While technology would seem to be the solution to this kind of data accumulation, some observers are cautious about its usefulness. Ferrill says BWH is not aware of that kind of technology, noting that it would be more incumbent on TMCs and other travel suppliers to develop those systems because it would involve duty of care, insurance and other factors. However, she says, “it would be helpful for BWH to know this kind of information to better support our customers and guests.”

The issue has less to do with the technological solutions available and more to do with how this spend is managed at a corporate level, according to Pahlke. For hotel stays, he says, many firms will understandably limit the number of additional nights that can be utilized for the purpose of leisure. One area that technology could support, he says, would be the ability to more accurately match and track bookings made under the same guest name.

To assess bleisure growth, says Sisko, travel managers could compare hotel nights to total trip nights to isolate that segment, or to analyze any variances in expense and agency data.

Boosting Partnership
While it would not seem to be in a hotel operator’s interest to encourage convergence, there are benefits for them as well, according to observers on both sides of the table. This kind of negotiation, says Pinnell, “does not need to be adversarial.” With growing awareness of the power of ancillary spend, he says, hotels can get more ingrained as true partners. And that partnership will work both ways, he explains, because the economic environment is always changing. So whether it’s a buyers’ or sellers’ market, he says, the transparent relationship will hold.

“We’re totally in support of it,” says Cabot-Bini, “because we want to partner with customers to understand the full value of creating a mutual partnership.” However, she stressed that this kind of negotiation “is about much more than rate; it’s about sitting down and talking about what each side can bring to the table.” Talking only about rate, she says, “misses the broader picture where two sides can come together to create something more meaningful.”

Hilton for Business, the recently introduced program for small and medium-size businesses, says Cabot-Bini, enables customers to toggle back and forth between personal and business spending, and all that spending can be considered in negotiations. “This is a conversation that is happening,” says Cabot-Bini, “and it’s sometimes framed as a discussion of extracting deeper discounts, which is a bit shortsighted. It’s more about how we all pool our chips into the center of the pot so we can all get a better reward.”

Hotels do care about ancillary spend as much as room revenue, says Pahlke, adding that Sage is open to a holistic, total revenue approach in discussing travel programs. “We are constantly working with our hotels to rethink the guest experience with this kind of guest in mind,” he says, “specifically how can we support the business traveler and simultaneously take care of them when it’s time to shut down the computer and shift into the weekend."

A possible alternative approach, says Johnson, is to maximize hotel loyalty program benefits. By enrolling employees in the programs, he says, travel managers can benefit from the aggregated volume of their stays, even if only a fraction of those stays are for personal reasons. This can result in perks that are typically associated with frequent travelers, such as complimentary upgrades, more flexible cancellation policies or inclusive breakfast options.

“If it helps build loyalty,” says Ferrill, “we are happy to have those discussions to accommodate our customers.” That kind of open exchange, she says, “supports our approach to working with customers, or partners as we call them, which focuses on building relationships to understand individual needs and creating mutually beneficial solutions that work for both our partners and our hotels.”

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