Travel managers long have struggled with hotel rate parity,
accessing accurate rates and amenities in corporate booking portals and
digesting all the associated data, but why? Speakers at the recent The Beat
Live conference in Chicago discussed the challenges and suggested some hurdles
are the result of a heavily fragmented hotel selling environment and reliance
on airline technology—namely global distribution systems. Solutions remain
elusive.
Carlson Wagonlit Travel president of suppliers, products and
technology Andrew Winterton said that 50 percent of client hotel bookings in
North America are completed through the travel management company, with the
remainder made via online travel agencies, direct phone calls to hotels and
other channels. One reason why travelers book outside designated corporate
channels is that they "have the perception that the OTA rates are better
than the TMC consortia rate," he said.
CWT clients save 21 percent on average through the TMC
channel versus spot buying via OTAs, Winterton said, but travelers don't always
know that. Steps should be taken to ensure they are using "the right rates
in relation to their corporate leverage."
For Marriott International, "there will be continuing
pressure" to respond to rate fluctuations, according to senior director of
B2B e-commerce Geoff Heuchling, as there are "3,500 different general
managers setting rates and inventory" across Marriott's system.
"We ultimately have to do what our owners want us to
do, and we'll respond as we need to," Heuchling said. "We have tried
very hard to get good rate integrity across the various channels, and we are
proud of what we have done. We want our corporate customers to buy the way that
the travel managers want them to buy. Fortunately, we are big enough to
[overcome rate integrity problems] with one of our brands or with one of our
owners, but not everyone has that clout."
Another challenge is the lack of inventory descriptors
within corporate booking tools. "We are living on airline systems, which
is what makes it a little tougher for us to manage and work better for our
customers," Heuchling said. "We spent a lot of money trying to
develop this central database to push some of this data out, but it's a
question of what [GDSs] can receive and what they can display. There may be
better compliance if some of the booking tools were easier to use or offered
that same level of content. We can push it out; if they can take it, that might
be at least part of the solution."
Winterton agreed. "We are using airline infrastructure
to distribute hotel inventory, and that is the biggest broken wheel that we
have as an industry," he said. "It is incumbent upon us to reuse the
existing infrastructure and actually try to do it intelligently so that we can
get much better distribution that allows people to get a much greater
understanding of what they are buying."
CWT is "trying to make sure that [it has] the same or
consistent features available to users," Winterton added. "To date,
we have not managed to do that. It's very much on our agenda to try and drive
that, otherwise we are not going to get the game-changers that we are talking
about."
'Horrific' Data,
Reporting Challenges
Because some travelers continue to book outside approved
corporate channels, travel buyers tend to look to the corporate card to gather
spend data, but that data is "horrific," said Lanyon chief commercial
officer Michael Boult.
"If there are 50,000 hotels in America, there are
50,000 different merchants and different descriptions of a property,"
Boult said. "Credit card information doesn't synch up and it doesn't
connect."
Unlike airlines that use ARC standards to report data
through GDSs and on corporate cards, hotels have no such reporting methodology.
"With hotels, it is normal to pay at point of use," said Winterton. "You
would all have the same issues in the airline industry if we all showed up to
the airport to pay with our credit card as we were boarding the aircraft or
after we get off."
According to Sabre Hospitality Solutions COO Stephen
Fitzgerald, "The property management system is where all of your charges
live, and there is no standardization among room types or room codes, whether
you bought a bottle of water at the minibar or you bought a movie. There is no
conduit back out through the PMS through the central database in a reporting
structure. It doesn't exist."
When properties receive direct bookings, they may not know
from which corporate account the traveler is from, according to Marriott's
Heuchling. "That is part of the challenge that all the clients are facing,"
he said. "That's where the opportunities are. Because [hotels] are the
soft underbelly of the travel distribution business, there are a lot of
opportunities to look for cost savings for both customers and hotels in that
respect."
Eyes On Compliance,
Audits
Conference speakers also touched on effective ways to
monitor rising hotel rates and keep them in check.
"The RFP is the least important of all the things you
could do to manage the spend," said Lanyon's Boult. "You can't
control the market price; any one corporation can't move a market. They can
influence that property potentially, but we are talking about big, macro
numbers. We are actively talking and encouraging our clients to fixate on
things that they can change: compliance management. Fifty percent of the spend
is flowing somewhere else, and of the 50 percent that actually does land inside
the TMC, probably 50 percent of that is with a nonpreferred supplier."
Said Winterton, "Even though there is a large number of
[hotel] programs, we are not really mining the full opportunity for managed
travel. A lot goes to the request-for-proposals process or the negotiations,
which can probably deliver 5 percent or 6 percent of the savings. There's
another 10 percent to 12 percent that comes from operating within" a
compliant, managed program.
Sabre's Fitzgerald predicted that 2011 "will really be
the year that [hotel auditing] tools will gain some traction in the market,"
because travel managers will hone in on compliance, rate parity and rate
accuracy more than in recent years as pricing stabilizes and rate
renegotiations cease.
"We saw hotels re-offer a lower price even after
negotiations," Fitzgerald said of the conditions during the economic
recession. "We are going to get back into an environment where
corporations, travel management companies and agencies are going to want to
deploy audit tools that are available now to make sure that the price that they
negotiated is bookable."
This report appears in
the Nov. 8 issue of Business Travel News.