Lodging rates are a moving target right now. To get your aim right, look to Phat Data
By Jennifer Steinke
In the July 2018 issue of Business Travel Executive, Phat Data took a deep dive into the new and upcoming data opportunities for the hotel space. We called it “Holy Hotels!” Since that issue we have been through two years of pandemic, hotel rate rollovers, new approaches to the hotel RFP process and an increase in dynamic and chainwide rate agreements. As travel patterns have changed, buyers are becoming more focused on negotiating rates only in key markets and expanding their hotel footprint with dynamic rates. This approach brings to the buyer some unique opportunities on the data front. And honestly, it brings up more questions than answers.
Measuring the value of the managed travel program and specifically the hotel program is an important metric to most buyers. It also provides travelers with safe and consistent product that enhances their experience, removes doubt and ensures their safety and security. Everybody wins! But what do we really know about our hotel programs?
As we get back to business travel and start to think through the future of the managed travel program, buyers should consider looking into three areas for their hotel program: Negotiated rate compliance and assurance, validation of dynamic or chainwide discounts, and what’s booked vs. what was negotiated.
Negotiating What, Exactly? Let’s start with what seems like – and often is – the never-ending hotel sourcing process. We spend hours upon hours analyzing past spend and determining target markets and rates, and then go through multiple rounds of negotiating, and, viola!, we make it to rate loading. Intense for sure, but we got it done, right? Now we think the magic happens when the rates are loaded, but the fact is, more often than not travelers do not book the negotiated rate or even understand the rates that are presented to them in the booking process.
This is problematic, but the bigger challenge is that we don’t even know that our travelers aren’t booking our negotiated rates until it is too late. The saving grace to this conundrum is that there is technology in the managed travel space that solves this problem. Why wouldn’t a buyer want to know at the time of booking that a traveler booked the preferred property and didn’t book your negotiated rate? Why wouldn’t a TMC want to make certain that this rate assurance is part of the overall value proposition it is offering its corporate clients? Why are we still talking about this problem??
Buyers and suppliers – especially TMCs – should be monitoring this, collecting data on the number of times rates are either not being found in the booking process or aren’t being selected by travelers when they book. Then the issues should be proactively managing at the time the room is booked, and once rectified, data about the savings realized should be collected and reported on.
Interestingly, when companies implement rate assurance tools, what the analysis uncovers is a very critical data point, and that is how often the rate the traveler books is actually less than the rate you negotiated. This is data that should be available to you, the buyer, as part of your negotiation strategy. This information gives you specific, measurable data that should be used in your sourcing initiatives. Imagine, four out of five times the hotel is offering travelers a lower rate than your negotiated rate. It makes you say, “Hmmm, am I overpaying?”
This isn’t about rate shopping; that is a whole other approach to managing hotel spend. This is specifically targeted at negotiated rates. When aren’t my travelers booking my corporate rate and how often are they being offered rates that are lower than my negotiated rates?
These days, we all use averages, but averages don’t tell the true story. On the other hand, line-by-line data is hard to digest after the fact. So why not be proactive and address this issue at the time the reservation is made, and not months later? As buyers, we should start asking these questions now and seek out the tools and technology that will allow us to maximize the value of our negotiated rates and obtain the savings we worked so hard to get.
Analyze This The next area that seems to be problematic in the hotel space is the validation of the data on dynamic and chainwide rates. If you negotiated that 15 percent discount off BAR, how do you really know you got it? Can the hotels provide you with real time BAR rates and include that in the booking data? No. As we look to tackle this challenge, one thing we realize is that there isn’t always a standard hotel rate category called Best Available Rate. So that makes it hard to automate the analysis and accurately identify and validate that, yes, indeed that hotel room that was booked actually received the correct discount.
When hotel chains are asked to prove on a reservation-by-reservation basis that the discount was applied, that data is often not available. This is not Phat Data – this is problem data. As an industry, we should be seeking out ways to validate the discounts being offered. Buyers should be asking for this level of detail with validation, much like it might show on a hotel website. For example, member rate gets 15 percent off or pays $XXX instead of full rate. The booking tools, GDS, or some other means (hint, hotels) should be able to quantify every dynamic and chainwide rate that’s booked with the comparison rate, and guarantee that buyers received the rates they have negotiated. Honestly if this validation is not available, then these types of rates become much less valuable.
No matter how you design your hotel program – negotiated, dynamic, rate re-shopping, chainwide – you need accurate data to tell the story. How we use that data today to design, development and implement our hotel programs of tomorrow continues to rely on our ability to ensure booking accuracy. Whether it is travelers not booking negotiated rates, or rates dropping out of the system, squatters in your program, or our inability to validate the percentage off discounts, we need to begin to put together better data standards for hotel programs.
It is a big ask to turn the hotel data space upside down, but taking baby steps to implement rate assurance tools for your negotiated rates, or just asking the question about how your dynamic rates stack up will give both buyers and suppliers better insights and ensure that the data we have today will be the Phat Data of tomorrow.
Jennifer Steinke is Global Head of Travel for PPD, Inc., and an industry thought leader with over 30 years experience managing corporate travel. She holds an MBA plus Certified Corporate Travel Executive (CCTE) and Global Travel Professional (GTP) certifications from GBTA. Jennifer strives to deliver innovative and thought provoking ideas to the corporate travel industry.