smart mobility management - n°9 I 26

As savings become harder to find across the travel category buyers are delving

into the hotel and accommodation space with renewed vigour. Jonathan Green

explores best practice hotel procurement.

Consultant PwC predicts

a mixed outlook for the

hotel sector in Europe.

Some cities are expected

to show growth but

overall RevPAR (Revenue per avail-

able room) is expected to slow. For

hoteliers the importance of retaining

existing customers in a slow economy is

of paramount importance. With this in

mind how can corporate buyers secure

the best rates?

Go armed with data

Understanding demand is the first step.

What travel is planned, to which loca-

tions and what volumes are expected.

By undertaking a full analysis of existing

hotel data sets, rates and market trends

a buyer can be prepared. Portman

travel describes data like this as “inva-

luable for benchmarking and identifying

where cost savings can be achieved,”

adding, “don’t assume that your hotel

spend is too small to leverage improved

deals.”

Compiling transparent and comparable

data sets can be a challenge however.

Florian Tinnus, Head of Corporations

and Resellers, Global Customer Group,

at Amadeus explained, “Based on the

nature of the hotel industry, data quality

of this commodity remains the biggest

challenge for the buyer – especially

when compared to airlines.”

Data on hotels can come from a range

of sources, TMC reports, credit card

feeds, the Global Distribution System

and online content which then needs

to be aggregated and reconciled. This

can be a time consuming process, but

advances in technology mean that solu-

tions which reduce the administrative

challenge of data aggregation are no

longer just available to those with the

biggest spend.

Traveller Expectations and Compliance

One approach to achieve savings could

be to simply downgrade hotels, but this

approach can wreak havoc with

compliance across the entire travel

category and increase overall costs too.

Mark Douglas, Director of Sales, at Hotel

Booking Agent HRS advises buyers, “To

check and ensure that their hotel pro-

gramme is relevant to what their travel-

lers need and want, taking into account

location and facilities as well as rates.”

The approach taken by corporates to

drive compliance varies and depends

on company culture. Tinnus explained,

“There are companies that run a very

property specific programme where

travellers are mandated to stay in the

company approved hotels, or on the

other end those who provide just a per

diem cap for the traveller as the only

compliance factor. On average, we find

something in the middle works best - a

programme must have compliance fac-

tors such as safety standards, proximity

to company location and hotel classifi-

cation.”

With a boom in booking channels,

comparison sites and mobile technology

business travellers increasingly expect

their company booking processes to

replicate their leisure experience. In

theory an excellent programme, with

great properties and rates, can be

compromised if the booking process

is too wieldy and overly cumbersome.

This means ease of booking needs to be

factored into the equation when

sourcing a supplier.

If a process is simple and oRers value

travellers are more likely to comply

Douglas believes. He said, “Companies

should work with a hotel supplier that

provides tools that make it easy for the

traveller to book on the go - last minute

bookings are on the rise amongst busi-

ness travellers, who more often than not,

Hotels: Negotiating the best deal

FOCUS Hotel and accomodation

smart mobility management - n°9 I 27

have to react flexibly and charge their

travel arrangements at the last minute.”

Ancillary Costs

When is a room rate not a room rate?

When breakfast, WiFi, car parking or

other ancillary items are included in

the rate. PwC believes that loyalty and

reward programmes could make the

diRerence for hoteliers between success

and failure in attracting guests in 2013,

and this principle can be extended to

negotiating ancillary items in room rates

at a corporate level. It is in this area that

travel buyers can demonstrate the value

add of a managed hotel programme to

travellers and in the process deliver bot-

tom line savings.

Building an understanding of the costs

incurred by the hotels when distribu-

ting content could also yield savings.

Douglas adds, “Another consideration

we recommend that buyers take into

account is to understand hotels’ costs,

in terms of the channels that they are

using to distribute their room inventory.

A buyer can leverage the lower distribu-

tion costs to negotiate the very best

rates with the hotels directly.”

Programme Management

The true eRectiveness of tender nego-

tiation comes into focus once the pro-

gramme has been implemented. The

rates may have been negotiated with

hoteliers, but this does not necessa-

rily mean that they will be available to

travellers.

Lanyon, a hospitality solutions provider,

estimates that rate loading errors on

the GDS are costing corporations an

estimated €5bn each year in additional

expense.

Hotels are responsible for loading nego-

tiated hotel rates at a property level and

there is no one entity that has complete

control over the process. This means

that contracted rates do not always

appear on the GDS, the system used by

many suppliers to supply data to corpo-

rates. Portman Travel, a TMC, estimates

that between 25 - 40% of rates are

either not loaded or incorrectly loaded

onto the GDS.

To minimise the risk of so called ‘rate

squatting’ by hotels, buyers should

perform regular audits. In a vast and

dynamic market like hotels this can be

a challenging process and buyers may

choose to invest in technology solutions

that perform automated checks to see if

the correct rate has been loaded.

All about the data

Data once again holds the answer. A

travel manager armed with meaningful

data is able to go to market informed

about accommodation needs and nego-

tiate in a meaningful way. This is where

the challenge lies in the hotel sector.

Perhaps as the drive for savings focuses

in on the hotel market suppliers and

data reporting firms will invest in simpler

solutions that address the long standing

problem of gathering and comparing

hotel data.

Jonathan Green

Seek “value add” services when negotiating with hoteliers.