The wheels of change were already rolling through the lodging sector, and the pandemic has only accelerated the shift. Sophisticated rate monitoring technology, a demand for greater flexibility and a need for tighter scrutiny of health and safety protocols has created an environment for a top-to-bottom rethink of hotel programs.
As these changes blow through, what does this mean for the traditional and much-maligned annual RFP process? “While RFP processes won’t be disappearing anytime soon, they will become increasingly sophisticated as organizations attempt to capture more value from their travel spend,” says Valerie Layman, VP of product management for Coupa Software, a spend management solutions provider in Seattle. “This is because travel managers today are increasingly trying to satisfy two competing priorities: cost savings for the company and enhanced traveler experience.”
“Covid-19 has created opportunities to rethink the RFP process,” adds Tamara Laster, vice president, global sales strategy at IHG. “The introduction of rate monitoring and shopping technology has helped customers understand the value of dynamic pricing. While the change in booking behaviors can largely be attributed to COVID-19, rate shopping tools are also causing booking windows to shrink from 11 to 14 days to 2 to 3 days prior to the day of arrival. This is a behavior we will continue to monitor to understand if this is temporary or more permanent behavior change,” Laster says.
The pandemic is also throttling down the ability of travel buyers to focus on the resource-intensive RFP process, says Jill Hatfield, vice president, global sales North America, Wyndham Hotels & Resorts “With fewer resources and less time, buyers are limiting the number of hotels included in their programs and focusing on fewer markets – the top destinations that they are certain they will be traveling to in 2021,” she explains. “Outside of those markets, buyers are relying on chain-wide discounts with their preferred suppliers as well as rates offered through their travel management company. Essentially, due to uncertainty, buyers are scaling back on the RFP process. Many of them are now navigating the ever-changing complexities of pre-travel testing requirements and post-travel quarantine restrictions.”
However, there may be a silver lining underlying all this change. “We see a stronger sense of partnership being established,” states Pauline Robin, senior director of hotel solutions at RoomIt by CWT. ”The RFP process is being transformed due to the pandemic, with detailed COVID-specific cleanliness verifications included in the process, and a
different dynamic between corporate buyers and hotel suppliers.”
Fixing the Broken Chains For years, the corporate travel industry has struggled with a less than satisfactory – and for some, painful – hotel procurement process. But the impact of COVID-19 is making buyers feel uncertain about the direction of their hotel programs. Do they and their hotel partners hunker down with fixed rates they already have on the books or try dynamic rates?
“In a fixed RFP rate environment, there are times when your fixed rate may be higher than the public rate based on specific market demand or current level of hotel occupancy,” Hatfield notes. “So while it may be more difficult to monitor and audit, a dynamic rate product offers the assurance that you are always paying less than the public rate, which may not always be the case with a fixed rate especially in today’s fluctuating business environment,” she says.
“Continuous monitoring is the answer,” advises Robin. “Buyers have the possibility to partner with sourcing professionals in the industry who have access to the right data, tools, benchmarking and local markets intelligence, to understand exactly how savings can be captured, while ensuring traveler satisfaction, safety and security objectives are also met.”
Steve Reynolds, CEO of Tripbam, breaks the differences down further. “COVID has caused massive layoffs across the hotel industry and a dramatic reduction in hotel bookings. Companies that try to use the traditional process will struggle to get a response from their chain or property and will find it difficult to obtain a static rate due to inability to forecast rates and volumes in 2021. In addition, most of the chains are willing to provide a dynamic discount over a static. We are advising clients that they should go dynamic as long as it is a fair discount based upon client volume, evergreen and automatically renews, can be audited, rate caps in place in the online booking tool, LRA provided, and no seasonality.”
That said, most buyers are still leery. How do they know if they’re getting the best deal?
“We take the data we have collected across 2,000 clients over several years to establish a good discount for our clients,” continues Reynolds. “This formula takes the client’s volume at the property, in the market, and globally along with the discounts achieved in the past. We then benchmark as compared to other clients that are similar to establish a ‘good’ for the buyer and for the supplier. If the buyer wants to be more aggressive, they can easily request a greater discount. Technology today makes it as easy to audit a dynamic rate as a static rate. We simply capture the BAR rate at point of sale, apply the negotiated discount and compare to the rate booked. We also check that all amenities, cancellation policies and commissions are correct as well.”
Creativity Without Compromise The old saying “Necessity is the mother of invention” is nowhere better demonstrated than in corporate travel programs that have pivoted and come up with creative alternatives to old systems and processes – whether that means switching hotel programs over to dynamic discounts or adding duty of care wellness policy into the hotel booking process.
Keeping the demand for flexibility at the forefront has been crucial. Hotels have liberated the definition of “wellness” from just luxury spas and gluten free food to include a broad range of initiatives that make the traveler feel comfortable [ital] and [end ital] safe. Today, the main duty of care policies revolve around sanitation and cleanliness, for both hotel staff and guests. A growing number of companies, including Marriott and Hyatt, require all guests to wear a face mask while indoors.
However, cleanliness goes beyond mask wearing and hand washing to include a wide net of initiatives, and this is where creative responses have surged. From signs and decals indicating guests to stand six feet apart and Plexiglas partitions at front desks to odorless electrostatic sprayers with hospital-grade disinfectants and touchless check-in and room service that’s specially packaged and delivered, hoteliers have stepped up with an array of innovations to revive traveler confidence.
Here, it seems, the sky’s the limit. Reports abound of hotels increasing the frequency of cleaning in gyms, spas and lobbies, installing new HVAC systems (both to improve air quality as well as reduce the presence of pathogens in the air), using plant-based products to remove odors sometimes caused by harsh-smelling hospital-grade cleaning products, providing bedding that has been tested to act as an effective viral barrier, to even offering “treatment menus with immunity-boosting therapies.”
The role of technology is significant in this pivot, especially in the area of design. One aspect of the design sphere is capturing “wellness” inside spaces and places. This covers everything from the placement of green plants and flowers in office buildings for better air quality to streaming sunlight and other “natural” elements to boost employees’ work spaces and help hotel guests. Design also includes rethinking everyday items to offer touchless and antimicrobial products (e.g. the replacement of TV remotes and installing hands-free door opening solutions, among others).
Another interesting trend is the role of strategic initiatives that inspire traveler confidence in cleanliness protocols; for example, Wyndham Hotels & Resorts Count on Us initiative, Hilton’s Event Ready with Clean Stay program (in collaboration with the Mayo Clinic), and IHG’s partnership with the Cleveland Clinic for its Clean Promise.
Future Wheels of Change Nonetheless, beyond these partnerships, when it comes to duty of care, it’s important to remember that keeping the traveler inside the system will be key. “Increasing hotel attachment rates is becoming extremely important to determine where travelers are at a given point in time, as well as where they have traveled to in the past – as now a company’s duty of care may actually extend beyond the trip,” cautions CWT’s Robin.
COVID-19 has been and is likely to continue to be the agent of unrelenting change, driving new wellness and duty of care considerations, as well as compelling the traditional RFP process to give way to something more complex. However, Tripbam’s Reynolds is optimistic. “It is rapidly becoming a lot easier to establish a deal with a hotel and monitor performance, and more dynamic in both the type of discount and when deals are established. Gone are the days of set it and forget it. A travel manager needs to monitor regularly and establish deals as needed.”
As more organizations prepare for their employees to begin traveling again, even in a diminished capacity, buyers need to stay ahead of these trends. “Content and information has become a critical currency and so as an industry, we are going to have to find ways to mine content and use historical content to shorten the RFP process,” IHG’s Laster observes.
Additionally, says Coupa’s Layman, “We will see a significant change in the management of travel spend as a whole. We believe the existing siloed solutions for sourcing/RFP, budgeting, policy, booking, expense and payments/reimbursements will go through significant transformation due to the pandemic.”
It’s no surprise that health and safety will remain on top of the priority list as we move into 2021. It is likely that properties selected in hotel programs will be carefully screened to ensure cleanliness procedures are being followed, buyers will rely on traveler feedback more closely to better understand how hotels are performing, and even more innovative wellness trends will surface to put the business traveler at ease.