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Blackout Dates More Prevalent?

May 04, 2012 - 12:15 PM ET

By Michael B. Baker

Negotiated Hotel Rates Less Accessible In Seller's Market

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 football games.

"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 minimum?"

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."

This report originally appeared in the May 2012 issue of Travel Procurement. 

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