In each issue of Business Travel Executive, the members of our Buyer Think Tank offer their individual thoughts on what’s hot, what’s cool and what’s coming next in managed travel.
Hotel Compliance Isn’t Easy…
Hotel rate compliance seems to be the bane of every travel buyer’s existence. It is hard to monitor on a near real-time basis and often we don't know things are wrong until it’s too late to do anything about it. More frequent and real-time rate audits seem to be the only way to catch issues before you have overspent. Most travelers take for granted that the rates in the OBTs are accurate, and why shouldn’t they? I am excited for the day when blockchain and smart contracts are in place and things are validated and only booked within those contracted rates.– Jennifer Steinke…And It’s Not Getting Easier
Hotel compliance is a moving target. At NetApp, we think we’re doing well to get compliance of 55-60 percent. However, the most vocal complaints that I get from NetApp travelers is always about the hotel program. How many times have I heard, “I can get it cheaper directly from the hotel”? Hotels, both chain and independent, expect corporations to meet production commitments but undermine those same corporate agreements by direct marketing to travelers. Just as with airlines, yield management has inserted itself into the daily management of hotel revenue. Changing rates and promotion of dynamic pricing are undermining the ability of travel managers to fulfill corporate agreement goals. Maybe that’s not a bad thing in light of a changing technology environment and new distribution processes. It all means new and more vigorous hotel agreement methods are needed. – Mark ZieglerTake Care of Business
A hotel program is important for duty of care, buying power, future meetings space as well as providing your travelers a better experience. But hotel compliance is a perennial uphill battle for the corporate travel manager.It is difficult to compete with the online hotel websites. Although the restrictions can be extreme – no loyalty points, nonrefundable, no changes, pay upfront, etc. – employees booking in this channel often overlook these limitations. All they see is the lower rate, but what’s the effect on the traveler experience? Each company takes a different approach, but basically, what’s necessary is to have an understanding of what’s important to your travelers, shareholders and overall travel program. As for myself, I believe in a hotel program especially since duty of care is important. Knowing where my travelers are staying if an emergency occurs and we need to locate them – this is the best traveler’s experience.– Gloria GonzalezSavings Are in the Details
Managing a company’s hotel spend is an integral part of maintaining a successful travel program. However, this can get to be a tedious task, due to the fact that rates need to be negotiated annually, there are many properties in a single hotel program and often seasonal rates/blackout dates come into play. Unfortunately, contracting for a specific corporate rate and having it successfully loaded into your travel tools does not automatically mean that the rates can be left unattended for the rest of the year. Many times, rates somehow drop out of your tools, specific room types where rates are applicable sell out and with NLRA rates, travelers do not have visibility to really know when a hotel reaches a certain occupancy level which negates your contracted rate.
In order to combat these issues, a travel manager or TMC must audit the rates on a quarterly basis. If a rate drops out, it’s better to catch it early rather than try to appeal to a hotel at year’s end to get an adjustment. Also, closely monitoring your average daily rate (ADR) on a monthly basis and researching an uncharacteristic increase through reporting can help identify specific hotels where travelers are not receiving contracted rates consistently. Many TMCs offer compliance tools which can flag hotel bookings that exceed a threshold not only for a market but for a specific hotel if the rate is higher than the threshold you have defined.In short, a well-managed hotel program can bring a very high ROI. But it must be closely monitored. – Chris Brockman
Watch for the Right Opportunity
Give the people what they want, when they want and they’ll want it all the time – seems like an impossibility. But with the right conditions, delivering the product your travelers want and making it easy for them to get that value can equal a win for all. Striking the right deal with an innovative hotelier who wants to maximize the partnership by providing the rate you need with some incentives for the traveler, can help the hotel program and hotel rate compliance.
Study the Phat Data available to you to see what your travelers are trending toward and then ask them. You can even test strategies on a shorter term than an annual RFP and maybe take advantage of some additional inventory you may not have considered. Communicate and guide your travelers about the added value they receive when they book the properties and rates via your corporation’s preferred channels. Regular audits of both your OBT and TMC’s rates, narrowing the types of rates displayed by a single property to your OBT users, etc., and monitoring everything helps gain compliance. When right opportunity arises “giving them what they want” can work.– David Smith