Hotel experts have projected that buyers will experience more
favorable negotiating conditions for the 2017 hotel request for proposals
season, and HRS is seeing that dynamic play out with its clients in North
America.
Advito's 2017
Industry Forecast, released in September, slated hotel rate increases for
corporates in North America to land between 3 percent and 5 percent. The pricing
outlook from Carlson Wagonlit Travel and the Global Business Travel Association,
released in July, put rate increases at 4 percent.
HRS head of corporate sourcing for the Americas Jeff
Hillenmayer said the company is seeing rate increases closer to 3 percent for
its clients' RFPs. "The aggressiveness that people were talking about
going into the end of this year has been tempered a lot as some of the [revenue
per available room] growth numbers haven't been quite what some of the major
parties initially had expected," Hillenmayer said.
Indeed, Hilton reported mild RevPAR growth of 1.3 percent
year over year during the third quarter, and for the second
consecutive quarter, it revised the company's full-year RevPAR growth
expectations from between 2 percent and 4 percent down to between 1.5 percent and
2 percent. Bjorn Hanson, a clinical professor with the NYU School of
Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism, also
revised his projections for corporate rate increases in light of slowing ADR at
U.S. hotels.
Nevertheless, Hillenmayer said some hoteliers, particularly
in the luxury segment, are still asking for larger increases that are out of
pace with the market in order to reduce their most deeply discounted business.
The move, once more, has buyers looking to trade
down to segments where the proposed rate increases are less aggressive.
While other trends of recent
RFP seasons, such as a willingness of hoteliers to tie in ancillary items
like breakfast and parking, have continued for the 2017 season, Hillenmayer
said some newer patterns have emerged.
The Small Meetings
Trend
HRS is seeing more buyers trying to merge their small
meetings programs with their transient RFPs. He credits new technology for the
shift. "We've had more customers ask to include the GBTA Meetings Module
in the RFP and actually want to negotiate that," he said. "In past
years we've had maybe one or two customers do it per sourcing season. Now, I
feel like that's part of every other conversation that we have with prospects."
Hillenmayer said looping in meetings with transient is
challenging because the two traditionally have been siloed on both the
corporate and hotel sides. "It's making the RFP process a little more
complicated because we're not just negotiating one transient rate; we're also
negotiating a meetings rate and, in some cases, an extended-stay rate, as well.
I don't want to say we're making it more complex; we're just making it more
complete."
Circling back to the trend for giveaway ancillaries,
Hillenmayer said hotels have been willing to wrap in meetings elements, such as
rooms and A/V equipment, into contracts for corporates that can commit to a set
number of room nights.
The Independent Trend
Because HRS's bread and butter is its relationship with
independent hotels, it tracks that it would see clients add more business-grade
independent hotels to their preferred programs.
That is true for the 2017 RFP season, Hillenmayer said, but
independent hoteliers also are offering deeper discounts than branded hotels.
The corporate rates being offered by independent hotels are as much as 10
percent lower than traditional hotels, he said, and independents often are more
eager to negotiate. "They really want to be part of the program, and
they're willing to throw in additional amenities."
The Reduced Chainwide
Trend
In recent years, some travel buyers have shifted to using
chainwide discounts in secondary and tertiary markets in order to focus on RFPs
in primary markets. But that practice also has led to some headaches, as
properties that fall under those chainwide discounts sometimes appear as
preferred hotels with a negotiated rate in online booking tools, misleading
travelers, according to Hillenmayer.
This year, though, HRS has seen a number of travel buyers
move away from chainwide discounts. "They're great at a property
level," Hillenmayer said. "If you're going to book Hotel A and you're
going to get a 10 percent discount, great. But some travel managers are
realizing: Just because they're getting a 10 percent discount, it's not the
lowest rate their traveler could get in the market if they looked at other
properties."
One driver, he suspects, is the glut of new loyalty
member discounts hotel suppliers are offering for booking direct. "If
travelers book those, there's still some discount there," he said, but
travelers book them based on savings instead of booking pricier chainwide-discounted
properties in an effort to do the right thing.