Kathy Pruett
Like many others, Advito senior director Kathy Pruett expects corporate hotel rates to remain stable or increase slightly for 2009. Pruett discussed with Management.travelher predictions for hotel rate negotiations and offered tips for travel managers embarking on the season. Pruett also discussed Sabre's acquisition of BidStork and why outsourced requests for proposals technology (Advito contracts with Lanyon) is helpful in managing complex hotel programs.
What is the negotiating environment looking like this year?
In general, it is still going to be a mix. It is going to vary market by market because of the way the U.S. economy is. In the major markets like New York, Washington, D.C., Chicago and Los Angeles, there is still going to be a lack of availability because there is going to be a lot of inbound traffic from other parts of the world that will keep rates up and occupancy levels up. Secondary markets throughout the United States are going to see the impact of the U.S. economy more because companies are trying to cut back their travel. This year is definitely different; it is definitely going to give some leverage back to the buyer.
What are some other trends in the market?
What we are hearing so far and what we think is going to happen is that the rates are going to stabilize or increase just a little bit. But there may be some opportunities for negotiating the total cost of stay; in other words, negotiating to get more things included in that rate. Hotels might be willing to include high-speed Internet access instead of charging for it to keep that company's business and to keep the rate at a good rate. Most companies are looking very carefully at trying to consolidate to make sure that they have the right number of hotels in each market, so they can truly deliver their business to their preferred hotels. They are going to push hard this year for last room availability.
Why do you think LRA will play more of a role this year?
For the past couple of years, availability was an issue in the U.S. market, and hotels were very reluctant to offer those last room availability discounted rates because they knew they could fill up with higher rates--like their rack rates or high-demand rates. Clients sometimes got a lot of resistance from hotels in doing [LRA]. Clients are going to be in a better position to be able to demand last room availability with their rates because hotels are a little more apprehensive about what their occupancies are going to be. You may see in places like London, India, and China, where the demand is still so great, that it will be hard to get last room availability, because the hotels are still going to look at year-over-year double-digit increases [in room rates] and they know the occupancy will stay on pace.
Where did electronic hotel foliogo?
[Laughs] We have been asking ourselves that same question. Right now we are putting all of our data together to start doing our analysis, and we were asking ourselves, 'Where is that e-folio data that we need?' As far as I know, most of the major hotel chains are able to provide e-folio data and its details, so now it sort of sits back in the corporate travel manager's role. To my knowledge at this point, we have not talked to any clients who have yet rolled over to e-folio data, but it is still a little early.
What do you think about Sabre acquiring BidStork and becoming the first global distribution system to enter the RFP market?
I thought it was interesting. Everyone seems to be expanding their capabilities. We are having a discussion with Sabre in a couple of weeks to understand what their positioning is going to be with BidStork, so I really don't know at this point too much about how that is going to look and how it is going to work. [BidStork's] pricing model was very attractive, and the product was designed not necessarily on the National Business Travel Association format. It was based upon bids that would be handled a bit more differently and was geared toward programs that were a bit more mature and didn't require as much data collection. Frankly, I haven't looked at that product in a couple of years, but that was just my understanding at the time. Also, it was just a little bit less complex in its platform, so that was probably one of the ways it was able to price a little bit more attractively. We looked at it, and it didn't meet our requirements at that time. Now, they may have some enhancements since then. I do think they have changed their pricing from that model. Outsourcing the process can have a couple of different meanings. One can be managing the whole process, doing everything and monitoring what is going on. The other way is to simply outsource using the technology that we have been talking about: the actual communication of sending out bids, the communication of either accepting or denying the bids. A lot of these technology providers just offer that piece to be managed by the travel manager. The old process--without using that outsourced technology--was to send faxes and e-mails to the individual hotels. Using this type of technology is a much more efficient and effective way that hotels and chains across the world are accustomed to in receiving requests for bids. Using the technology is just a must for corporate accounts that are sourcing a hotel program. To what degree they need that technology would, of course, depend on the size and complexity of their program, meaning they would need someone like us to help them complete the process and to help them make good decisions on which hotels to select, which ones to reject and which ones to renegotiate with.