Pegasus Solutions last week began the first phase of a new rate program that seeks to raise awareness of thousands of independent hotel properties. The Pegasus Global Rates Program in part would aid corporate travel buyers and program managers during the solicitation process by combining Pegasus' Utell and UniRez portfolios into a repository of more than 10,000 independent, boutique and small-chain properties--each of which would be pre-qualified based on relevance to the corporate market.
A long-time provider of technology and representation services to the lodging sector, Pegasus ultimately intends to deploy the new program with specific rate code plans across five channels: merchant, corporate, travel management company/consortia, group and opaque/wholesaler. "We really want to make a name for independent hotels and make a better play for them in the corporate arena and TMC arena," said Rachel Chabalko, senior director of online services. "This gives independent hotels the reach that they did not have before."
Pegasus is starting with the merchant channel by "flipping the net rate concept on its head" to resemble certain strategies undertaken by big chains, Chabalko explained. Hoteliers would load their best rates and get "the same preferential treatment as a typical merchant hotel gets," but rates would not be marked up. Instead, Pegasus would pay "an enhanced commission [to distributors] that we take out of the commission we collect from the hoteliers."
Pegasus thus far has solicited hotel responses for listings through its UltraDirect distribution links, which include such outlets as Orbitz, Expedia, Travelocity, Hotwire and various tour operators. Chabalko said "serious" use of the program in the merchant channel is expected to begin in early 2007.
The company said PGRP would be ready for corporate and TMC/consortia channels by mid-2007, in time for the next solicitation season. At that point, Pegasus' corporate customers would be given the choice of PGRP or the usual mass solicitation process. "We would evaluate their request for proposals and qualify it for them," Chabalko said. "We might be able to tell them, 'As part of PGRP, already with rates loaded, there are 4,000 hotels that meet your RFP criteria.' "
"You know you can contract with Marriott and get all the big cities," Chabalko continued, "but what about when your corporate travelers need something in a secondary or tertiary city, or internationally, where chains really are not as powerful as they are here in the Americas, and the independent properties hold more clout? Because the portfolio is so diverse and truly global, you don't have to worry about knowing all those markets, having people in those markets and having those relationships--on top of managing air contracts, car contracts and everything else."
Hotels "simply would use the negotiated rate functionality they have used for years," Chabalko explained. "On the demand side, there is really no new technology needed at all. There are existing processes and technology that both the hoteliers and the demand customers are used to. Pegasus is just now able to be in the middle of that."
Complementing PGRP, Pegasus currently is redesigning its online distribution database, in which tens of thousands of hotels store content. "It is making hotel types searchable--this is a corporate hotel, this is a resort hotel, this is city-center hotel," Chabalko said. "Being able to bundle that search functionality with these particular rates is what we are waiting for to drive corporate business" through GDSs and alternative points of sale.
For interested corporate travel professionals, these developments could streamline complicated hotel sourcing and program management. "Global hotel RFPs are a complex, time-consuming process that travel managers oftentimes find they cannot undertake on their own," said Balboa Travel Management founder Joe de Rosa. "If they do, it is a tremendous headache."
"Of all the categories of travel expenditure, hotel spend is the area where travel managers have consolidated their suppliers the least," according to a recent report on globalizing travel programs from Amadeus and the Association of Corporate Travel Executives. "The hotel category has always been difficult to manage because of the fragmented nature of the industry, particularly outside the U.S. Hotel deals tend to be negotiated on a property-by-property basis, with agreements with chains and the TMC hotel program serving as a back up."
Because Utell consists of predominately overseas properties and UniRez is more centered on the Americas, "we have really leveled the playing field," Chabalko explained. "People coming to Pegasus before had to contract with both if they wanted that global coverage, or pick if they want an international or domestic focus. Now they don't have to pick anymore."
"We have joked that the biggest reaction in the industry will be, 'It is about time. Pegasus should have done this years ago,' " Chabalko said. "We are taking advantage of our own technology. Both the GDSs and the alternative distribution system partners connect to hotel central reservations systems through us, so these rates can really go anywhere."