bringing it all TOGETHER
The ways in which corporates are consolidating and managing their hotel spend is diversifying, writes Gillian Upton, who looks at how best to optimise your accommodation outlay
Content is king in the world of accommodation and travel managers today are able to find a B&B in Lancashire as easily as they can a four-star hotel in London.
TMCS are working hard to not only pull in content from the GDSS but also a raft of aggregators and direct channels to offer as wide a choice as possible, from the mega hotel chains to the independents and more.
Moreover, technology has enabled greater visibility of that content, so a traveller or travel manager can view the rooms virtually before making a decision and also check out any feedback on a particular property.
Mark Bevan, Head of Strategic Relationships at Business Travel Direct, believes the choice is now overwhelming: “It’s a minefield of content particularly when trying to find the best rate as the OTAS like Trivago have confused the market. The rate may be lower but there’s no traveller tracking, CSR or duty of care, for example.”
Optimising hotel spend comes down to utilising sophisticated rate auditing technology to find like-for-like lower rates and then re-booking. Often these rates are lower than the corporate rate, which gives the travel manager leverage for the following year’s negotiations or makes the decision easier to drop negotiated rates and RFPS and switch over to a dynamic rate instead. These are a percentage off BAR but could be as little a 4% discount.
“Hotels are moving away from a static rate for 12 months,” says Click Travel’s Chris Vince. “It’s all about competition at the end of the day but a dynamic rate is only great if you haven’t got huge amounts of volume.”
Andrew Sisons, Strategic Account Manager at Good Travel Management, reckons hotel inventory now looks more like airline inventory, by offering highly-discounted, non-refundable room rates.
Turning up the volumes
Booking 100 nights per annum in a small town will likely get you a discount plus an array of benefits, but a hotelier in London won’t shift for that number of bed nights.
It’s supply and demand at work, supported by very sophisticated revenue management software that influences availability and pricing. However, if a client can offer a minimum of 500 bed-nights a year then hotels are more likely to be more flexible but there is a caveat here too: “Volumes of 500-plus will generate deeper discounts but this will also depend on the customer’s specific travel patterns such as days of the week, advance booking behaviour and the hotel size,” explains Rachel Newns, Hotel Programme Manager, FCM Travel Solutions.
If all your business is on Tuesdays – a hotel’s busiest night – you’ll have less negotiating power than, say, bookings on a Thursday or Sunday night.
Similarly, if you can offer a hotel a spread of business – transient, M&E and F&B – you are a more attractive corporate and more likely to negotiate discounts.
Moreover, Vanessa Griffiths, outsourced procurement practitioner at ROK Consulting, says that luxury hotels will often be flexible
Booking 100 nights per annum in a small town should get you a discount and benefits, but a hotel in London won’t shift for that number of bed nights”
with lower volumes. “They’re happier with smaller volumes,” she says. Rather than be swamped with a few larger accounts – which would be risky if they lost one of them – luxury hotels will often take the lower-risk option of more, smaller accounts.
She also believes that of all the potential soft benefits, Last Room Availability (LRA) – whereby a hotel is obliged to sell you its last available room at your contracted terms and rate – is the most difficult to negotiate. “You need high room night production and tight controls in place to deliver what you’ve promised,” she explains.
Rates with benefits
More easily achieved in the negotiations process, perhaps, are soft benefits such as free wifi access, cocktails on arrival, F&B discounts, dinner concessions, gym access (which in some markets is charged for), early check-in, parking or a shuttle bus service to/from the airport. Each negotiation process is personal to your company and its business travellers.
Another cost-saving strategy is to hand the choice back to the traveller and achieve higher policy compliance. Introducing a rate cap by destination allows the traveller to either splash it all on a five-star hotel outside London and commute in, or downgrade to a Travelodge.
Putting it into practice
It’s a frustration for Richard Childs, Group Procurement Category Manager at Biffa, whose significant hotel spend – the majority of which is domestic – constitutes 80% of the company’s annual spend.
The spend may be sizeable but it’s also fragmented, which challenges preferred suppliers to negotiate discounts. Biffa’s single biggest supplier, Premier Inn, accounts for just 15% of its business.
“Most hotels want 200 bed nights a year and above before offering a rate so it’s difficult for us to get deals because we haven’t got the volumes,” says Childs. “Our fragmented spend is a frustration as we know we could get better deals.
“We have deals with IHG, Premier Inn and Best Western and we use whatever’s local to our site and negotiate preferred hotels regionally,” says Childs. So the Village in Newcastle and the 2,000 bed nights a year the business can offer the Holiday Inn in High Wycombe – Biffa’s HQ – shaves something off the rate.
Childs pays close attention to quarterly data in case new projects may have changed travel patterns and he’s
particularly keen to negotiate on soft benefits such as free conference rooms, parking, upgrades for directors and free projector use for the company’s M&E spend.
“Data is key today. We negotiate in December or January for the following year and we monitor those rates. Rate auditing is really crucial. What we’re good at is booking a long way in advance say, 8-9 days out, but our biggest challenge remains booking accommodation in London. It’s actually cheaper for us to stay in High Wycombe and get a taxi in. Usually we can save £500 in total,” says Childs.
Biffa’s travel policy is supportive rather than a hindrance so a traveller can stay overnight to make a 9am meeting the next day, for example. The company’s £25 food allowance can be spent as they wish.
Shortcuts to discounts
Some TMCS help the SME by consolidating multiple clients’ volumes. Inntel, for example, provides a consortia programme. “It means that they benefit from increased volumes that they wouldn’t get themselves,” says Douglas O’neill, CEO of Inntel.
In addition, it’s worth trying IHG and Accor as they both require reliably low spend for entry into their chain discounts.
IHG Business Advantage provides 4% discount off the chain’s Best Flex rates; Accorhotels’ Business Offer programme provides a discount on the BAR rate; and Hyatt Leverage gives eligible SMES access to discounts of up to 15% off the standard rate at certain hotels. Movenpick’s Partner Benefit Program – which kicks in at 50 overnight stays – provides a fixed discount across any of its 84 hotels, for example.
Another option, albeit a contentious one, is to reward and benefit frequent business travellers at no cost to the company by allowing them to become loyalty scheme
members. IHG, Hilton, Marriott, Wyndham and Accor are popular as they have a global network of brands at different price points.
Expect room upgrades, free wifi access, breakfast, access to the executive lounge offering free meeting space, light meals and refreshment throughout the day. Many of these perks can actually help save the company money.
Such schemes for individual travellers work well in association with a company's chain discount and regional or global relationship with a hotel chain.
FCM’S Newns says: “Aligning the scheme with the company corporate travel strategy is key, then the loyalty generated can improve hotel programme performance and adherence, improve traveller experience, and it’s all funded by the hotel.”
Good Travel Management's Andrew Sisons reckons it works best for companies with a good number of regular travellers, from around 25-50, because they could effectively earn one to two nights per week over a year that they don’t have to pay for.
Of course there is the grey area of just who should benefit from the perks accrued through individual memberships – the company or the traveller themselves, who may wish to spend the privileges earned on business in their own leisure time instead. Some companies allow members to use points to upgrade to a superior brand within the same group which would otherwise be above budget.
Wyndham Rewards unites some 25,000 hotels, apartments and holiday homes and is rated as one of the most generous schemes in the marketplace. It has a staggering 56million members globally.
Members earn a guaranteed 1,000 points for every qualified stay and can redeem them for a free night at any of Wyndham’s properties worldwide for just 15,000 points per room per night.
Accor’s Le Club provides rewards after only spending 10 euros. The scheme is based around four tiers – Classic, Silver, Gold and Platinum – and the group's budget brands such as Ibis and Ibis Styles have an even lower entry level.
As with all these strategies, it’s about the time you put in to ensure you can deliver the volumes. Negotiate an annual rate for your hotel programme and leave it for 12 months at your peril.
Some TMCS help the SME by consolidating multiple clients’ volumes. It means they benefit from increased volumes that they wouldn’t get themselves”