Determining the right corporate hotel programme option for your business

Both TMCs and businesses with large hotel spends face the challenge to gather their figures, combine that information with all their upcoming needs and then set about trying to use this data to secure the best possible accommodation for their travellers and rates for their employers. But buying is no longer just about negotiating corporate rates with hotels. Here are some trends to look out for.

1 Customer Experience, not just corporate savings

Some companies still focus on the spend but more are looking at traveller needs and thinking instead of value for money.

An accommodation strategy is as much about the traveller experience as it is about savings through negotiation. Some places that travellers might want to stay, such as sharing economy properties, may meet corporate budget criteria but not its duty of care requirements.

Traveller experience is not only about the overnight stay itself. Travellers now commonly book their own travel online so consequently have visibility of what else the market has to offer. Travel managers are recognising that travellers are becoming more expert which is a strong argument for devolving more decision-making. For example, if managers choose to work with a chain rather than a specific property, travellers are capable of then selecting the specific property at the destination.

2 Volume

Rather than having a comprehensive programme with named properties at every location, buyers are increasingly focused on their key destinations, i.e. ones where they have sites or clients and consequently strong volumes, and then working with groups or suitable properties with a presence in the locale to get the best value.

Given the challenges faced by managers in achieving the uptake required to negotiate the keenest corporate rates, the trend is to focus on consolidating spend with one or two chain-wide deals. Managers can assess which domestic or worldwide locations their travellers are visiting and leverage all the volume to negotiate a sizeable discount with a couple of big hotel groups. Then even when only one traveller is booking one night with a contracted chain that traveller will still be able to benefit from a discounted corporate rate.

The buyer trend is to focus on destinations in which they either place – or know they will be placing because of a new company location or client – a significant number of room nights.

3 Total Cost of Travel

Buyers with significant extra spending on items such as parking and WiFi, should consider negotiating to include them in the room rate.

More importantly, a corporate should highlight their travellers’ total spend in a hotel every night they stay. Customers who have a relatively high TRevPAR (total revenue per available room) are generally more valuable to a property.

Buyers can leverage this extra spend to get a lower room rate. In the past F&B might have been a separate expense line. Better integration of data means that manager can encourage a change of behaviour, such as travellers eating their evening meal in the hotel, to achieve a lower room rate.

Flagging meeting spend with a property is also evidence of a more desirable corporate customer.

A customer whose travellers need room nights on a Sunday or Monday should similarly be able to negotiate a keen rate. Hotels have no incentive to offer a corporate room rate to a company offering 100 room nights on a Tuesday because popular, big business cities are regularly oversold on peak business travel nights. Travel managers need to make use of any data which shows them to be an attractive customer.

4 Group or Chain Properties

Most travel programmes seek discounts on rates and choices for travellers.

A corporate might typically have a tiered programme to cover as many requirements as possible such as a few chain deals for their big cities and, where possible, negotiated rates for specific hotels which reflect the chainwide deals.

The goal for any programme is to achieve as much volume as logical to support an overall discount.

As travellers increasingly do their own bookings it is important to encourage them to use the company code when using the supplier site or, as when they use third party consolidator or OTA, they won’t be recognised as a business traveller.

5 Loyalty Rewards

People who travel a lot for business can earn significant loyalty rewards.

Such benefits cost the corporate customer nothing and a company can use these points as an incentive to achieve greater programme compliance.

Points can also be a keen retention tool for frequent travellers because as the traveller accumulates points and moves through tiers, they will receive more benefits such as upgrades and free WiFi.

6 Reporting

Companies can maximise the value of corporate rates by using reports and audits to check availability and uptake. This is especially important for corporates relying on only a few chains. The TMC should check to ensure negotiated rates have been loaded and available to book and if not, resolve the issue. It should also investigate any bookings which reports may reveal have been made at 5 or 10% above the negotiated rate.

A classic issue is that a negotiated rate is unavailable because of limited stock. For example, the property may be designating only a small number of rooms as standard and eligible for last room availability rate (LRA). If a hotel is unable to comply with a corporate’s needs over time because of rate unavailability or because of traveller choice, it might be time for a programme change.

Much can be written about pricing and negotiating but an increased emphasis on traveller choice means paying close attention to the uptake of a programme. If there is leakage, it may be because the properties might not be matching traveller taste which could be looking more for smaller, boutique properties, serviced apartments or sharing economy accommodation.