< PrevNext > 2020 Business Travel Buyer's Handbook Setting Up a Corporate Lodging Program Covid-19 Update: Lodging Dynamics Favor Buyers With Grip on Demand By Dawit Habtemariam / July 27, 2020 / Contact Reporter Share Download ChapterResearchers and procurement specialists predict lodging rates will fluctuate for the remainder of 2020 but remain lower than they were in 2019. To capture existing demand, hotels are expected to offer attractive rates for the upcoming request or proposal season. Industry projections show lodging demand and revenue per available room to fall short of pre-pandemic levels until 2023.As travel returns, demand could outpace supply in some markets as some hotels will remain closed and health protocols will limit capacity. Revenue managers will adjust rates frequently to find "Goldilocks" occupancy and RevPAR increases where they can.Sourcing DynamicsBuyers likely will have a compliance advantage for the remainder of 2020 and going into 2021. They'll be supported by senior stakeholders on their desire to increase influence on travel decisions. Travelers also may see value in keeping travel managers informed about their whereabouts and may be more receptive to program parameters. As a result, buyers will be in a stronger position to shift volume to preferred hotels. This will add to their negotiation power. Still, most buyers are largely uncertain of when and how much of their travel volume will return, so to capitalize on their stronger position, they will have to maintain strong dialogue with travelers and leadership to understand their true demand environment.Some buyers are wondering whether to source hotels formally for 2021. Some may extend current agreements through next year, defer the sourcing process and/or adopt dynamic discounts instead of fixed rates. Others may want to renegotiate with key partners for new fixed rates but with more flexible terms. Each of these tactics will operate in an ecosystem that is experiencing depressed travel demand, limited inventory and drastically reduced hotel staff.If buyers roll pre-pandemic rates into 2021, it could undermine attachment and compliance to preferred hotels as travelers find lower rates on hotel websites or online travel agencies. If buyers opt for a dynamic rate strategy, they will need to audit booked rates against market rates. More suppliers are now offering these services. Cleaning Up the Hotel ProgramSanitation and hygiene standards will be a top priority in negotiations. The American Hotel & Lodging Association has released safety and health guidelines developed in collaboration with public health experts. Hotels have built upon and enhanced those guidelines in their own cleanliness initiatives. Under such protocols, hotels promise to sanitize rooms and high-touch areas frequently, retrain staff in effective hygienic practices and change up services that involve close human contact. Hotels also are introducing touchless technologies to their check-in and checkout processes as well as for in-room dining.At the same time, buyers will need to determine and communicate the standards and practices they require to ensure their travelers are safe and healthy. They will need to confirm preferred properties abide by the standards. Traveler feedback surveys will need to be updated to include questions about cleanliness. Services and technologies are emerging to support these efforts. Third-parties have started to certify cleanliness standards. Online hospitality rating provider TrustYou has created a Covid-19 recovery kit for hoteliers, and startups are pushing technology solutions for hoteliers that will detect cleaning actions and certify that in-room sanitation protocols were properly executed. Be Ready for ChangesDesired hotel amenities will change. Once valuable add-ins like full-service dining, communal social areas, shared business centers, and onsite pools and fitness centers may be less important with travelers anxious about exposure to Covid-19. Services like in-room dining, on the other hand, will become more important. Some travel managers may look to forge deals with third parties like Door Dash and Grubhub for foodservice, should onsite food options dwindle at hotels. Including a breakfast buffet won't be a priority. Instead, buyers may want to turn negotiation efforts to cancellation policies and penalties. At the beginning of the pandemic, hotels were flexible with cancellation policies, but as travel resumes, hotels will need to maximize the return on what may be limited inventory. In July, brands like Choice Hotels and Marriott International tightened such policies, adding more restrictions and penalties. Buyers should expect cancellations to be more expensive and be prepared to negotiate better terms for travelers who need to adjust itineraries as the uncertainty around Covid-19 continues. Some buyers may look for new lodging providers amid Covid-19 concerns. Serviced apartment providers will be an interesting category to watch. While they've been hit hard during the height of the Covid-19 crisis just like hotels, some brands landed major funding deals and can claim a more socially distant business model than a traditional hotel. This could bode well for homesharing platforms like Airbnb, which has seen a surge in leisure bookings for the summer months. However, misgivings about the platform's ability to standardize cleaning protocols across hosts could hamper homesharing opportunities in corporate travel programs.