Hotel Program Management
Developing and managing a corporate hotel program takes a lot of work. When considering the benefit of negotiating deals and discounts for air, car, and hotel suppliers, companies should seriously consider the ROI (return on investment) on negotiating a hotel program in particular, because while a preferred hotel program typically carries the most long term cost savings opportunity, it is also the most arduous to negotiate and maintain.
HOW TO DEVELOP A PREFERRED HOTEL PROGRAM
The first key steps in developing a preferred hotel program is determining the timing and methodology to solicit hotels for deals. The majority of hotel discounts for corporate clients are negotiated on an annual basis. Once negotiated, the hotel utilizes a unique rate code that is “loaded” into their inventory management system and global distribution system (GDS). These rates tend to be valid until December 31st of the negotiating year and will then “fall out” of the system. So, most companies seek to have corporate rates for the year in place as close to the first of the year as possible, in order to take most advantage of the rate. In order to meet this timeline, best in class organizations typically begin this process in late Summer or early Fall and follow this basic process:
- Utilize a best in class Hotel Request for Proposal (RFP) tool. These tools provide capabilities to enable automated negotiations, rate loading, and benchmarking. These are familiar to hoteliers and preferable versus using generic RFP tools or simple Excel spreadsheets
- Analyze historical property specific spend for the previous 6-8 months. This data should be normalized to provide a representation of a total year’s spend
- Utilize all available resources to analyze spend including Travel Management Company (TMC), Credit Card data, and Expense Data. If you have a leakage tool such as CapTrav you can find all of the hotel data you need in one place
- Aim to have initial bids send out by early to mid-September. Depending on spend and market, you can negotiate in earnest and still have time to have the hotels load accepted rates for year end
HOW KESSELRUN CORPORATE TRAVEL CONSULTING CAN HELP
If you are going to handle developing and managing a corporate hotel program, you have to be committed. Depending on the automated RFP tool selected, it can represent a significant investment. In addition to the financial investment plan on investing time in what will become a time consuming project – setting up the tool, performing the data analysis, sending bids, managing negotiations, accepting rates, and auditing rates.
For many organizations, it makes more sense to outsource the function. KesselRun performs this exercise for scores of clients and has been doing so since our inception 16 years ago. Typically, when compared with the costs associated with performing this job in-house, KesselRun’s corporate travel services provides a tremendous value.
- KesselRun utilizes all of the market leading automated RFP tools. We can select the right tool for any given client situation or will use the tool required by the client
- We provide all of the data analysis required to correctly assess where the opportunities lie and which properties should be included on the RFP solicitation
- We provide strategic consultative help in determining how many bids should go out by city, ensuring that you have the right mix of coverage and supplier leverage
- KesselRun provides a hotel rate negotiation workbook which provides all of the information you need to make go/no-go decisions. We including year over year rates, amenities to be requested, property rate benchmarking, and our advice on which rates to accept and which to negotiate or reject
- We conduct both formal GDS rate auditing and spot auditing, as required
- We will provide you a formal hotel directory which you can publish on your corporate Intranet site
- We will provide on-going program support – we can add or delete properties from the program as the business needs change
For most organizations the most significant cost savings comes from a well managed preferred hotel programs more than any other supplier type. As a result, the effort described here typically yields compelling results.
As a general rule, these individually negotiated rates should be biased on any display system you use because these should be the best available rate. If you find the negotiated rates you have negotiated are not more favorable than other rates displayed, you should take a hard look at your negotiations.
In most instances, a company will bias its individual rates first, and then bias the Travel Management Company’s (TMC) consortia rates, followed lastly by any publicly offered “rack rate”.
By following the above, you are on your way to creating and maintaining a successful hotel program.
For more information about how KesselRun can help your corporate travel program, contact us online.