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Business Travel Management News Stories

Hotel Programmes: Why Bother?

The answer is that a hotel programme, a curated list of preferred hotels which offer large corporate discounts in exchange for a promise of business, is not for everyone. A small company may feel that the resource required to establish a programme is disproportionate to the savings that a programme could generate for example. It might also be that travel patterns are so irregular that having preferred hotels in particular cities is of little use.

Yet a growing number of companies are recognising the value that a hotel programme can bring in the shape of firm savings on travel spend - typically up to 15%.

Implementing a hotel programme is not just about savings either. The Corporate Manslaughter and Corporate Homicide Act which entered into force in 2007 has made companies more aware of the need to protect their employees from harm whether they are in the office or out on the road on a business trip.

The number of convictions under the Act is small but growing and companies are increasingly taking their duty of care towards their employees far more seriously. This means ensuring that hotels used on business trips are both appropriate and safe and also tracking the traveller more closely while they are away. Both of these objectives can be met through a preferred hotel programme.

Assessing the need



The first step in establishing a hotel programme is to work closely with your travel management company (TMC) to get a detailed view of what you are already spending on hotels. A good TMC partner will be able to share volumes of business in particular destinations and, hopefully, with particular hotel groups. This information is essential to set the stage for negotiations with accommodation suppliers.

Into this should feed any additional data on leakage outside the preferred TMC channel - this could mean hotels booked directly by the traveller or by a colleague from an overseas office and claimed back through expenses. Your corporate card company or expense management provider should be able to do this.

Assessing the need is not just about looking at historical data. Travel patterns, particularly in times of economic growth, can change dramatically from year to year. If a new office has opened, there is a new client or a business development team is targeting a particular city, that destination could become a key focus in a hotel programme. This requires engagement with senior management and other stakeholders to align a proposed hotel programme with the corporate strategy.

Creating the programme



Once the need has been assessed - the key destinations and the likely volume in those locales - it is time to assess and engage with accommodation suppliers.

This is where a hotel expert at your travel management company is vital. They will know key properties in key destinations and know where to look for suppliers to fill the gaps in less well known destinations.

Securing room nights in specific properties at a discounted price is the goal of the request for proposals or RFP.

Hotel programme RFPs used to be extremely time-consuming but electronic tools such as Sabre Hotel RFP, used by Portman, and Lanyon RFP have made the process slicker and faster. They do this by providing a single online portal which handles requests and manages workflows automatically, reducing the likelihood of errors and standardising responses.

An important input into the RFP process is what benchmark is proposed, whether that takes the form of a fixed discount on best available rate or a fixed rate in a particular hotel or destination. In some cases, this benchmark might be expanded to include last room availability (LRA), where the discount is always available until the very last room in the hotel is sold although the rate might be higher than one without LRA.

If you know that your travellers always require some particular product or service, such as included breakfast or WiFi, this is the point at which to state it so that comparisons may be made on like-for-like basis. This is particularly important now there has been some polarisation in the market with some hotels offering inclusive WiFi while others charge it as an extra.

With larger companies now having to report on the Scope 3 carbon emissions related to business travel, hotel programmes are increasingly looking green and an RFP may ask for additional information from the hotel on sustainable practices, such as approaches to water and waste management, as well as asking for carbon emissions data.

You might also choose to specify a range of accommodation. If you have different travel policies for different grades of staff, you might want to ask for rates from a three, four and five-star property, in the destination to cater for general employees, senior managers and board members respectively.

There may also be a requirement for less standard types of accommodation, such as extended stay apartments and non-Global Distribution System (GDS) hotels, such as bed and breakfasts, and these may have to be assessed in a separate RFP process, possibly handled manually.

When the RFP closes, assessing the offers from hotels can be simply a case of choosing the lowest rates but more often it will require some consideration of the properties offered in conjunction with their rates. No two hotels are the same, even if they belong to one of the chains that offer a standardised product and service offering. If appropriate, this may also be the point at which to conduct site visits, either alone or with a member of the travel management company's hotel team.

It is also important to engage at this stage with stakeholders, particularly your business travellers. For example, imagine going through the process of putting together a programme and selecting a hotel in a destination and then discovering after the negotiating has been done that no-one would ever choose to stay in that hotel because it was hugely inconvenient for the client's office.

Responses from the RFP can also help if your intention is to establish per-diems or hotel rate caps in a particular destination rather than identifying specific hotels as preferred properties.

Implementation



A hotel programme that is well researched and put together but poorly communicated is worse than having no hotel programme at all. Getting buy-in from your business travellers is essential to make the programme deliver in terms of hotel savings.

Some companies have produced printed guides in the past for their hotel programmes but these are now increasingly being offered online so they can be kept up-to-date and cost less to produce. Potential communication strategies include identification in the corporate online booking tool, emails and newsletters. Some companies have also gamified their hotel programme. This might be done for example, by setting up league tables with travellers' ranked according to points they earn when staying in a preferred hotel.

There is also a final link in making this process seamless and ensuring the company saves money, namely making sure that the negotiated rates are loaded into the global distribution systems. Travel management companies typically manage this process with the hotels, carrying out regular rate audits to check that the promised savings are made available. Some hotel groups are better than others at ensuring this happens in a timely fashion and so rate audits are an important factor in making a hotel programme successful. Some of the electronic RFP tools can help automate this rate auditing process.

Example - Scotland 2014



2014 may prove to be an expensive year for travel buyers looking to secure hotels in Scotland. Glasgow plays host to the Commonwealth Games from 23 July to 3 August while the Ryder Cup will this year be at Gleneagles from 26 to 28 September. VisitScotland is also running a high profile Homecoming campaign throughout the year to encourage foreign visitors, particularly those with Scottish ancestral roots, to visit.

In its 2014 UK hotels forecast, PwC predicts that occupancy in the regions will increase by 0.4% in 2014 and average daily rates (ADRs) by 1.4%.

Jason McBurnie, Corporate Finance Director and consumer and leisure specialist at PwC in Scotland, says: "2014 promises to be an important and exciting year for hoteliers in Scotland, particularly those in Glasgow... Notwithstanding major planned events, historically, there's always been a close link between RevPAR (revenue per available room) and GDP growth and, while it's early days for an economic recovery, this should lead to increased levels of room demand and revenue growth in the following years".

Glasgow's hotel market has seen a 21% decrease in average daily rate since 2007 when it was announced that the city had been chosen to host the Commonwealth Games. Five new hotels, adding 671 new rooms, will open in the city in time for the Games. However, the trend has been slightly up over more recent periods; occupancy was up 2.6% to 74% in the first half of 2013 compared to the previous year while ADR was 2.2% up at around £60.

Key Takeaways



  • Ask your travel management company for historical room night volumes in your key cities
  • Combine this information with expense management reporting on room nights that have been booked via any channel other than the travel management company
  • Consider asking for rates at a range of properties, 2, 3 and 4 star as well as non-standard accommodation, such as serviced apartments and non-GDS properties
  • Do you ask for average day rate, discounts off best available or seek rates that include breakfast and/or Wi-Fi?
  • Check that the negotiated rates have been loaded in the GDS by the hotel
  • A well put together hotel programme can generate typical savings of up to 15% on spend

Conclusion



Why bother with a hotel programme? We return to that question. You bother because if it is well researched, the RFP is well conducted, the resulting preferred properties are appropriate, their rates properly loaded and the programme well communicated, then a hotel programme can help deliver on corporate objectives, helping save money and feeding into corporate duty of care and sustainability requirements.

The Expert View



Hotel programmes vary considerably, says Tammi Gelentere, Global Hotel Programme Manager at Portman. "All of our large clients have a hotel programme but so do some of our smaller clients," she says. "Some programmes may include five hotels in London but others have over 3000 hotels globally."

"Using an RFP tool such as Sabre RFP allows us to benchmark out clients' hotel rates not only against other Portman rates but also against others using the same Sabre tool," says Tammi. The Sabre RFP system handles almost 80 million hotel requests each year.

"We typically seek rates from not only the key properties in a city but 10 to 15 others in the same location to ensure clients enjoy the best rate on an ongoing basis.

"With the RFP tool, we are able to monitor rates on a quarterly basis and get room night production updates."

Companies are getting better at communicating their programmes too. "We have seen a lot of companies putting their programmes on the internal social network such as Yammer or their intranet sites. We also utilise our on line booking tool to ensure bookers are aware of the preferred programme as they feature or can be given preference. This ensures the travellers are aware.  

Tammi stresses the importance of rate audits.

"We ensure that all negotiated rates are loaded and bookable in different channels. Our rate loading levels are typically very high - around 85% on the first audit - although some hotels take three or four chases to get rates loaded. It is all part of our service."

A hotel programme can also lay the foundations for larger discounts as it shows the company has discipline and ability to move market share. Tammi says, "If a company is using preferred hotels, the more volume they can channel into those key hotels. This allows us to seek greater cost savings in future years."

Tammi Gelentere has been planning and managing hotel programmes for 18 years and knows the industry inside out.
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