In a post-COVID business travel world, artificial intelligence holds the key to a more effective hotel procurement strategy
By Keith Loria
Thanks to COVID, the legacy models that business traveler buyers had come to rely on in their hotel programs are broken. Volumes fell way below expectations, negotiated discounts weren’t providing value and forecasting models no longer worked. As the market recovers, the emerging environment is calling for new, more flexible and dynamic models and methods to be applied. That’s where automation and artificial intelligence (AI) come in.
“An annual RFP process won’t work if an unexpected market suddenly appears,” says Steve Reynolds, CEO and founder of Tripbam. “Sourcing needs to be much more continuous and real-time. In some ways, a traveler manager’s job will be much more valuable, but automation is required to make it work.”
Laura Kusto, vice president and global hotel practice leader for Advito and Stay by BCD Travel, notes it’s all about getting relevant and contextual information in the hands of the decision makers much quicker.
“Because it’s looking at things differently than they have before, it’s delving into things they haven’t considered before, such as prepaid and non-refundable rates having a really great place and a really great fit in a program. It’s realizing that as a travel manager, looking at your negotiated rates, you’ll have tools and data that enable you to make decisions not just once a year, but throughout the year.”
AI is being used in the hotel industry for revenue management, guest experience, and the automation of daily operations. However, Reynolds notes even though the technology is available, unfortunately, most companies are not using AI, machine learning or Big Data to optimize their travel programs in the best way possible.
That’s discouraging for the industry, as Tripbam has calculated that hotel costs that are optimized by adopting automation can be reduced by 20 percent or more.
“We’re pushing the corporate market to procure smarter by leveraging these technologies to drive additional savings,” he says. “As examples, constantly searching through data to identify markets where additional discounts will provide greater savings, monitor hotel performance to know if discounts are being applied and providing value, auditing every booking daily to ensure that discounts are applied and calculated correctly and if not, fix them before the money is spent.”
The Pros of AI The key benefits of automation and AI are the ability to scale processes and analyze large amounts of data quickly. For example, it’s impossible for a team of agents to review every reservation several times per day to ensure that the best rates are obtained, discounts are being applied, benchmark the rate against the market, and identify additional opportunities for discounts across every hotel in a market. “Automation allows that to happen and drive more incremental savings to the company,” Reynolds says. “In addition, it enables a buyer to shift share as needed in order to obtain good discounts.”
Automation can also improve chain and hotel transparency as both buyers and suppliers can review data-driven results and determine the value of the relationship. Some questions Reynolds notes need asked on the buyer side: Are they getting the savings as promised? Has the market changed to make discounts no longer valid? And on the supplier side: Are they getting the market share expected to justify the level of discounting? Are properties delivering the discounts as expected? “With this level of transparency, both sides can make more educated decisions resulting in better deals,” he says.
BCD Travel has invested in AI to improve how it matches data and get the numbers quicker, and has seen a dramatic improvement in its ability to do that. For example, Kusto points to its auto match rate, where matching data across different data sources has gone up considerably.
“The other thing that we’re moving towards is just bringing in that data on a monthly basis,” Kusto says. “We know that the providers of that data – the TMCs, the credit cards – have the ability to send that on a daily basis, but in this space, we haven’t made that shift. We still have clients who don’t realize these capabilities exist and still analyze data once a year.”
Visibility Into the Future With hotel rates a constantly moving target, timely, accurate data and the ability to analyze and act on it is more critical than ever. After all, hotel rates will change frequently, often several times per day – not only at the hotels booked, but at similar hotels within the market.
Automation and access to content is enabling artificial intelligence to quickly identify these rate changes and capture savings immediately without causing disruption for the traveler.
“To fully optimize a hotel program and hotel spend, always-on/real-time automation needs to be applied,” Reynolds says. “Catching mistakes after the money is spent isn’t good enough. You need to monitor every booking and catch mistakes before the money is spent and fix the issue real-time. The right decision at the point of sale may no longer be correct decision the closer you get to check-in.”
Just because TMCs are setting up their own room buying arms, it doesn’t mean that corporate buyers are losing visibility into the programs, though it does pose some challenges.
“Buyers need to be diligent in their monitoring of agency driven discounts,” Reynolds says. “Are they appropriate for corporate travel (prepaid, nonrefundable)? Are the discount levels as good as advertised? Do they contain the required amenities (loyalty points)? Are they as good as or better than the discounts I can obtain on my own?”
In addition, content sources need to be audited for potential bias, ensuring that non-commissionable discounts aren’t being hidden from travelers at the point of sale to drive more commissionable rates. Therefore, Kusto doesn’t believe corporate buyers are losing visibility, they are just getting access to another set of competitive rates.
Dynamic discounts are quickly becoming the norm. Not only do they provide significant savings but can be structured to avoid the annual RFP process going forward. However, dynamic discounts do require real-time auditing to maximize the benefit. “Travel managers with an ability to shift share will get far better discounts than those that can’t,” Reynolds says. “Gone are the days of getting and keeping a discount with no commitment for volume or share – or both. Buyers must have the tools in place to shift the share as needed and the metrics to justify the lack of shift if not meeting expectations.”
Managing a corporate hotel program successfully in 2022 means evolving from a static, annual exercise to dynamic interactions in real time. And driving that change are mountains of booking data and the AI to analyze it and turn it into actionable results. “It’s becoming apparent that if you’re not using that technology as a buyer, you are missing out on opportunities and you’re leaving savings on the table,” Kusto says.