With hotel occupancy rates climbing substantially, understanding your company’s total spend profile by property and by city is more critical now than ever. Today, hoteliers are not having a lot of problems filling rooms and as a result, hoteliers seek to deftly negotiate with corporate clients to ensure a good, long standing relationship with its business travelers built on sound data, a strong working relationship, and brand loyalty.
It is important for an organization to have a clear picture of its total hotel spend in any particular market. Given that most organizations do not purchase all of their hotel rooms through its agency of record, best practice is to aggregate and reconcile card and expense data to TMC booked data in an effort to get a clear picture of total room night production. Aggregation and data capture tools, such as CapTrav, also solve this problem.
Based on the resulting spending data, it is wise to evaluate how many properties in a given city will be ideal to award preferred status. If you negotiate too many or too few preferred properties, buying leverage is sacrificed. As such, it is important to understand the competitive landscape in each negotiating market before engaging in a preferred hotel RFP or directly engaging with a hotel property.
Dynamic Discounts Are a New Trend
In addition to negotiating traditional discounts, many properties are negotiating “dynamic” discounts which provide a percent off the “rack rate” at the time of booking. This method may or may not be in the client’s best interest so an evaluation should be part of this strategy.
KesselRun is seeing and supporting a trend in well managed hotel programs around “continuous sourcing.” Here, the strategy is to conduct a baseline yearly negotiation but continuously monitor room night volumes across the entire hotel program and modify as needed throughout the year in an effort to optimize program spend. Ultimately, the goal is to maximize savings across the right number and type of hotels without diluting the client’s discounted program with too many properties or the wrong type of discount
What Is The Best Way to Manage Hotel Supplier Negotiations?
While understanding the marketplace is important, it is also critical to understand the best way to go about hotel supplier negotiations. In some cases, a company may have dozens or hundreds preferred hotel deals across the globe. KesselRun utilizes the best available RFP technology which, while readily available, carries a cost to implement and know-how.
In addition to utilizing hotel RFP technology in support of bids, these platforms provide both the client and hotel a level playing field and the ability to evaluate other key areas of consideration such as a hotel’s practices and policies around its sustainability initiatives and capabilities to negotiate beyond just basic room rates including amenities such as breakfast, parking, WiFi, and more that can all be part of the negotiating process.
Travel Policy Plays an Important Role
As part of a company’s evaluation it should consider its current travel policy. KesselRun has found that many business travel policies today allow for the booking of Airbnb and VRBO in lieu of traditional hotel stays. We have found that as much as 20% of lodging can be attributed to shared economy type of bookings. This analysis should be part of the overall lodging strategy for any organization and should be evaluated both in terms of cost and traveler satisfaction.
Kesselrun Can Help with Hotel Negotiation
As with everything, utilizing an expert can be highly beneficial and pay dividends. KesselRun has been analyzing hotel spend data for more than 20 years and managing hotel programs for clients of all sizes and for all industry types. If you have questions or need help with your business travel program, contact us online.
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