Preferred hotel blackout dates—those periods when negotiated
rates are not available for booking—are on the rise, according to some travel
buyers, citing blackouts as long as weeks or even a month. Increased travel
demand and higher levels of sophistication among hotel revenue managers could
share responsibility for the perceived upswing, consultants said.
Increases in blackout dates, particularly in such gateway
cities as New York, London and Paris, have left travelers unable to access
negotiated rates and on their own to find the least expensive option in the
cities, said Bonnie Darkey, former vice president of corporate travel for
investment firm Lazard, adding that the company's preferred hotels add more
blackout dates every year. "Europeans never know it's United Nations week
[in September in New York City] and want to do meetings, so we can never access
our rate," she explained.
The issue is not limited to top-tier cities. Kevin Maguire,
travel director for intercollegiate athletics at the University of Texas, said
blackout dates have become such a problem in Austin—particularly during Formula
1 racing events—that the university is considering relocating conflicting home
"We have 1.7 million room nights in Austin a year,"
Maguire said. "A week before and a week after [Formula 1 events], rates go
up on average 450 percent and they throw out corporate agreements, saying, 'You're
not important.' How can you justify a Hampton Inn charging $750 with a five-day
Hotel consultants said they're not necessarily seeing a
sharp spike in blackout dates, although Carlson Wagonlit Travel hotel
consulting project manager Sherie Hermann said the shift to a seller's market
has made them more common in Chicago, New York and San Francisco. As group
conference travel recovers, such situations are "not out of the ordinary,"
she said, adding that the 2012 Summer Olympics in London is creating its own
set of headaches.
Hotels that requested longer blackout periods—particularly
those of 30 days or more—generally were receptive to negotiations for this year's
programs. Buyers who negotiated early had more of an issue with blackout dates
than those who waited, as some hotels were overly optimistic with projected
demand throughout the year, Hermann said. "Hotels in September didn't know
what their trending might be," she continued. "There was some
frustration, with some of the chain contacts coming back multiple times with
updated lists. Even the hotels in London are a little uncertain."
American Express Business Travel consulting director Marwan
Batrouni recommended that buyers request quarterly reviews with hoteliers to go
over blackout dates. Hotels may loosen up for periods in which high demand
expectations are not panning out, and reviews can identify small changes that
affect access to negotiated rates. "Sometimes, a five-day period might
have shifted by one or two days," he said. "Suppliers typically,
unless it's a really big change, don't go back and inform the client, so these
reviews are becoming more helpful as things become more fluid and dynamic."
Hotels in recent years have acquired more sophisticated
revenue management technology, so buyers must be even more leery of covert
blackout dates, according to Mike Boult, chief commercial officer at travel
tech firm Lanyon. Like the consultants, Boult said he has not seen an increase
in pre-set blackout dates, but business travelers not getting negotiated rates
is surprisingly common.
Data from Lanyon's rate-availability tool suggest that
negotiated rates are available on average only about 60 percent of the time. "That's
because properties are managing their yield on a frequent basis," he
explained. "As bookings increase, occupancies increase and buckets are
closed, and that fantastic rate you've negotiated means you're the first bucket
to be impacted."
Boult said buyers therefore should ask some key questions
during negotiations: What percentage of a hotel's inventory is considered "standard
rooms"? How often will an account's travelers be able to access negotiated
rates and amenities?
Since buyers negotiate with sales teams and property
managers—not the revenue managers who actually control these buckets—companies
need to monitor hotel program performance year-round and consider the data in
future negotiations, Boult said. A slightly higher rate at one hotel ultimately
might be more valuable than a lower rate at another that is rarely available to
travelers, he said.
"Comparing rate offers side by side is like throwing a
stone into a deep, dark well," he concluded. "If you're not actively
managing the category, then you won't have the knowledge or the insight the
next time you negotiate."
originally appeared in the May 2012 issue of Travel Procurement.