*GUEST BLOG* ​Hotel Sourcing in 2020: What’s Really Changing?

Sourcing was a hot topic at this year’s GBTA convention with education sessions like, “Ditch the Annual RFP (request for proposal) Process for Dynamic Programme Management” and “Point Counterpoint – Who Wins the Dynamic Pricing Battle?” Some companies have made headlines recently by declaring traditional sourcing models dead, and news articles consistently boast about sourcing enhancements that may or may not be arriving in the near future. 

The reality is there are exciting new advances in technology that can make the RFP - or bidding - season more efficient and create better results. But there are still some practices that will remain the same.

What will change?

Spend Analysis

Travellers booking outside of policy remains high (around 40% for most companies), which means agency data alone isn’t enough to fully understand your travel spend. Yet, reconciling and analysing data – an important first step in supplier negotiations – is challenging for 73% of travel buyers.

Thanks to advances in technology, algorithms can now clean and reconcile multiple data sources and present them visually, making it easier to uncover insights into the total cost of a trip. This data can also be used to negotiate everything from room rates to F&B discounts.

Intuitive sourcing tools

Wouldn’t it be nice if a tool could analyse your data and market trends in order to indicate how likely you are to secure a discount before you spend hours negotiating for it?

CWT Solutions Group is capable of analysing supply and demand at a market level in order to understand city occupancy rates and room inventory. They combine these findings with client travel patterns, supplier usage (hotel volume, market share, etc.) and change capacity.

The resulting Negotiation Power Index© helps you pinpoint where you should invest sourcing resources and where you should rely on other rate sources. 

Reliance on additional rates

Dynamic pricing is not completely overtaking your fixed negotiated rates but they should account for 10-20% of your hotel programme.

Additionally, you should rely on rates from your TMC (travel management company) for any property that receives roughly 150 room nights or less, as the discount secured will not be enough to justify the effort spent negotiating. RoomIt Rates offer up to 20% off and a minimum of six amenities.

More companies will be utilizing third-party hotel rates, like those from Booking.com and Expedia Partner Solutions, in their booking tools. These rates act as a gap filler, ensuring you have coverage all over the world, in case of compression, or for those one-off trips your programme doesn’t account for. They can also be priced below your client negotiated rate (CNR) depending on fluctuations in BAR.

To meet this growing need, more TMCs are offering third-party rates alongside GDS rates, making it easy for travellers to book a wide variety of content sources via corporate booking channels.

Greater mix of rates

Beyond providing optimal availability, a well-diversified rate mix also ensures optimal savings opportunities as well. A mix of negotiated rates, TMC unique rates, consortia rates, third-party rates and public rates is the best way to ensure the lowest rate is available to travellers. 

Even in a company’s top ten destinations, RoomIt has discovered that the lowest rate can be spread between negotiated rates, RoomIt Rates (our unique business rate), CWT Hotel Programme rates (our consortia rate) and third-party rates.

Additional negotiating tactics

For global programmes, there may be more emphasis on some additional tactics that help increase efficiency and decrease costs. For example, more hotels are open to two-year deals. Pursuing a two- year deal with core hotels can significantly reduce sourcing time and cost in consecutive RFP seasons. 

In regions where discounts are limited, you may also want to start utilising other forms of hotel spend, such as F&B. These discounts can come about in two different ways. You may be able to justify the expense as reason to receive deeper room rate discounts, or hotels may provide discounts directly to F&B.

Predictive analytics

One of the newest and most exciting developments is the ability to make forward-looking predictions, rather than only looking at historical data. Data scientists can now build predictive models that look at a large list of factors to help predict future rates for preferred suppliers. If your preferred supplier rates are expected to increase more than similar suppliers in their market, you

can add challengers to your RFP solicitation list.

What Will Stay the Same?

RFP Process

Negotiating with major properties via the RFP process is not going away. All the hours spent negotiating via RFPs can make us daydream about a new, innovative process, but the reality is this tried and true method still delivers the deepest discounts for clients with significant hotel volume. 

However, one thing you can do to ease the burden is offload some of the work on a trusted consultant. These experts negotiate rates for the world’s leading travel programmes and have all the data necessary to make well-substantiated decisions.

Dynamic rate share

As mentioned before, another exciting concept is that of dynamic pricing. The reality is companies are still capable of receiving 20%-49% off BAR with fixed negotiated rates. No other rate, including dynamic rates, can provide the same upper limit. 

It’s best to save dynamic pricing for areas where you have less buying power, or for when you need a quick win – like when adding a new market partway through the year.

Rate errors

Rate loading errors are still going to be an issue, because the rate loading process is still very manual. Luckily, however, automatic rate auditing tools are more common now. Your travel agency or consultants have technology capable of ensuring rates are loaded accurately, will verify availability, and can see if breakfast, internet, parking, and cancellation policies are correct. Be sure any technology used can detect squatter rates too.

There are exciting changes coming to the sourcing world in 2020 including new rates worth exploring, tools that will make data collection and analysis easier, and methods that will improve negotiations. Despite all this innovation, traditional sourcing methods won’t suddenly disappear with the changing of your calendars.

Click here to read the 2020 sourcing eBook. Blog author: Eric Jongeling, Director, Solutions Group, CWT. Register for Business Travel Show for FREE and visit CWT at stand B230 www.businesstravelshow.com

GUEST BLOG: How to survive hotel RFP season

As you work through your annual hotel review and RFP process, you might want to consider incorporating procurement strategy, traveller feedback loops, comprehensive reporting data, and emerging industry trends into your hotel RFP process to ensure the health of your hotel portfolio, say global travel management company CTM.

With hotel rates expected to increase from 1-4% in 2019 and occupancy rates at the highest in recent memory, this hotel RFP season may be bumpier than others. It is imperative travel managers source and select key properties that improve the experience for travellers and drive savings for the company.

Here are CTM’s key tips for surviving your annual hotel RFP portfolio negotiations.

1. Get your bearings

Begin by combining expense and travel data to measure compliance, identify leakage trends to combat, and identify target markets to include or remove from your programme. Focus on high engagement locations with the potential for greater buying power and focus on markets with highest leakage to increase compliance. Also include traveller feedback loops and discontinue properties with poor ratings.

 

2. Define your buying power

By analysing reservation and expense data, you can identify trends to use at your advantage during the negotiating process. Some industry experts suggest that additional amenities, which have been a major negotiating point in the past, have been less of a priority this year. But do not discount the ability for the hotel experience to encourage, or detract, from traveller satisfaction.

3. Evaluate all available content channels

Work with a TMC who can provide you with consolidated, single channel access to emerging content channels, consortia rates, TMC available rates, chain access deals, member rates, website rates, and non-traditional solutions, that could positively impact programme performance and traveller satisfaction. Incorporating additional available rates within a limited portfolio of properties may reduce the number of individual properties that you will need to negotiate with directly.

4. Automate as much as possible
When you are ready to process your RFPs to designated markets and properties, seek the help of your TMC partner to automate the process as much as possible. This allows you to focus on portfolio strategy, traveller engagement elements, and driving overall programme value. Automation also greatly eases the rate audit process to ensure traveller access to your compliant rates. 

5. Plan ahead for leakage

As a begin and end point to this process, review your hotel policy to ensure that it drives compliance and supports the traveller experience. Look to include direct mitigate leakage and attrition when communicating your updated hotel portfolio to your travellers. By addressing items such as luxury properties for VIPs, rate caps for specific markets, newly included amenities of chain deals, you can mitigate rogue traveller behaviour for the next fiscal period. 

This post was written by CTM, who are exhibiting at the Business Travel Show in 2019 on stand B620. Register now for your free visitor pass at BusinessTravelShow.com 

GUEST BLOG: LONDON AMONG TOP THREE PLACES IN THE WORLD TO STAY

Global hotel solutions provider HRS has compared average hotel room rates worldwide over the last four years (2011 – 2015) and revealed that despite economic uncertainties during this period, the outlook for the UK hotel industry is largely positive with an overall increase in room rates by 26 per cent.

In fact, London is one of the top three most expensive cities for an overnight stay in the world, costing £141 on average per night, according to the latest figures from 2015. Data revealed rates in the city had increased by 31 per cent during the four years, benefitting from the legacy of hosting major events such as the Royal Wedding and 2012 Olympic Games, making it an even more desirable destination for both business and leisure travellers.

In the UK, London, Leeds and Manchester recorded the biggest increases in average room rates per night between 2011 and 2015. During this period, Leeds almost doubled its cost per overnight stay with a 41 per cent rise and 30 per cent for Manchester.

Top Destinations UK & Ireland	∅ Room rate 1*-5*****      per night 2011 (£)	∅ Room rate 1*-5*****      per night 2015 (£)	Rate development comparison %
London	£108	£141	31%
Edinburgh	£93	£102	10%
Bristol	£81	£97	20%
Manchester	£73	£95	30%
Leeds	£66	£93	41%
Birmingham	£68	£85	25%
Liverpool	£68	£85	25%

New York, Rio de Janeiro and Sydney were the most expensive destinations worldwide on average for overnight stays in 2011. Unsurprisingly, New York has maintained this top position, enjoying a 32 per cent price increase in rates from 2011 (£149) to £197 per night in 2015.

Cities that could be ones to watch over the next couple of years, recording the biggest increase in hotel rates from 2011 to 2015, include Miami at 62 per cent, Mexico City at 52 per cent and Beijing at 43 per cent.

Top Destinations International 1-5***** Hotels

Average room rate for hotel stays in international cities.
Comparison of average rates, based on non-cancelled bookings. Public and corporate bookings.
Period: 01.01.2011-31.12.2015

Top Destinations international	∅ Room rate 1*-5*****      per night 2011 (£)	∅ Room rate 1*-5*****      per night 2015 (£)	Rate development 2015 compared to 2011 in %
New York	£149	£197	32%
Washington	-	£154	-
Tokyo	£115	£129	12%
Sydney	£127	£127	-
Singapore	£109	£125	13%
Miami	£71	£115	62%
Rio de Janeiro	£145	£113	-22%
Dubai	£82	£110	34%
Seoul	£95	£94	-1%
Toronto	£80	£93	16%
Mexico City	£60	£91	52%
Mumbai	£89	£81	-9%
Cape Town	£102	£81	-20%
Buenos Aires	£77	£78	1%
Shanghai	£55	£67	-22%
Beijing	£46	£66	43%
Bangkok	£42	£57	36%
Kuala Lumpur	£43	£50	16%

Jon West, Managing Director of HRS UK & Ireland, commented:  “London has clearly continued to hold its own as a major international destination for travellers. UK hoteliers should find it reassuring that other cities are also benefitting from the uplift in demand.”

“Globally the hotel market has fluctuated massively over the past four years especially with recent global events and ongoing economic uncertainties.  In addition to this, technological advancements are giving business travellers more control over their bookings than ever before so we really would urge travel and procurement managers to review the effectiveness of their travel programmes on a regular basis to ensure they’re getting the best rates possible to make substantial savings for the long-term.”

Written by Jon West, Managing Director, UK and Ireland, HRS. Global hotel solutions provider HRS will be exhibiting at the Business Travel Show on stand B755.