In a recent Business
Travel News survey, 254 travel buyers on average estimated that 68 percent
of 2010 hotel bookings complied with preferred lodging vendors and policies. It
was the lowest compliance figure among eight travel vendor categories.
Now, a spate of new online services that entice travelers to
book rooms with better amenities than those available using corporate rates is
making it harder to increase hotel program compliance. It's not just about
rates, though: Some of the new tools are quite useful and typically not
available in preferred channels. Viewed another way, the new options can
supplement hotel programs and provide equitable or better rates—even when
considering value-adds—than traditional booking methods. At the same time,
hotel companies are diversifying their direct distribution channels, and
managed travel providers are improving their access to content, with some new
tactics.
One recent entry in the space, Our Upgrade, enables those
business travelers who need an aggregate of 10 or more room nights in a city—including
themselves and colleagues—to act as their own negotiators. Travelers using the
site indicate the corporate rate they are permitted to pay and their most
desired amenities—Internet, meal coupons, room upgrades or rewards points, for
example. Hotels then respond with offers, and travelers can pick the one that
best suits their needs.
Without a serious marketing effort, bookings through Our
Upgrade have grown to about 1,000 nights per month, and founder Andrew Bate
sees room for further expansion, particularly among companies with insufficient
demand for full-scale negotiations. He's not aiming to pull travelers out of
compliance with their booking policies, he said.
"We're not encouraging people to break their systems,
and not everyone can use Our Upgrade," Bate said. "We're adding
value, but we're not trying to compete with American Express."
Travel Tech Consulting president Norm Rose said the site
seems most appropriate for small and midsize organizations, and it ultimately
would need a more corporate-oriented version with policy features to work in
managed programs. Rose also said integration with corporate booking tools would
provide value—a strategy Bate said the company is considering.
"We would love to be a supplement, a little widget that
can pop onto a travel agent terminal and send it through that process," he
said. "That's how we would like to start approaching [the agencies.]"
Travel search site Hipmunk about four months ago released
its hotel search tool. Founder and CEO Adam Goldstein said it was designed to
sort listings based on travelers' needs, rather than merely listing first
either the cheapest hotel or the hotel that paid the most for a preferential
listing. Hotels are ranked by location and proximity to local nightlife or a specific
place, such as a meeting site, though travelers also can sort by price or user
reviews.
While Hipmunk is not corporate-travel-focused, Goldstein
said it is gaining strength among small businesses and such travelers as
consultants who have frequent but erratic itineraries. There are opportunities
for further integration; the company has talked to some corporate booking tool
suppliers and has not ruled out working with TMCs.
"We're not going to cut off any potential
business," Goldstein said, "though for the moment, we're just
focusing on getting people to book through the website."
Another site, Room 77, has created a booking engine that
allows travelers to search by room preference rather than just hotels, mapping
out floors and rooms by type, size and location. It reports more than 500,000
rooms in its database and provides a mobile app that lets travelers evaluate
their room upon checkout.
Sites like Hotels.com, Kayak and Priceline already are
bleeding into the corporate travel market, R Group president Steve Reynolds
said. "To the whole collective potential, it's a threat if I can keep
finding better deals on my own than through a TMC or if I can get a better rate
than the corporate rate by going opaque," he said. "It's kind of weakening
the value of the traditional TMC, and I just don't see how in the long term
TMCs are going to survive unless they compete head to head with this."
Managed Providers
Plug Away
In light of the new hotel-booking tools, Orbitz for Business
might be seen as a more traditional provider. But the TMC this year began an
unorthodox program with exclusive prepaid rates, in which hotels have more
flexible cancellation policies than do typical prepaid bookings and allow
cancellations 24 hours ahead of the stay, if not right up to check-in. In
return, the hotels secure premium placement in Orbitz's displays.
Since the program began in January, bookings through Orbitz
at participating hotels have increased 62 percent year over year, compared with
a 20 percent increase for those hotels not participating, according to Orbitz.
"The corporate traveler is not used to actually
prepaying, so this has flexibility in case plans change," said Orbitz for
Business vice president of product development Anne Marie Razza. "We've
negotiated deeper discounts and/or additional business amenities included in
these rates."
Other TMCs also are concentrating on improving their hotel
content, in particular filling holes in GDS coverage outside of the United
States. BCD Travel executive vice president of global business solutions, sales
and marketing Louise Miller estimated that as many as 70 percent of hotel
bookings in Europe, the Middle East and Africa do not go through GDSs, and the
Asia/Pacific region faces similar challenges.
"We use content aggregation tools to provide structure
and greater efficiency to finding and booking offline properties," she
said. "At the same time, new technologies that enable content acquisition
are advancing at a rapid rate, and we're working to apply these advances to
help clients achieve goals surrounding hotel bookings as well as larger
imperatives, such as travel security and cost savings."
Carlson Wagonlit Travel in June launched a central
reservation platform, CRS by CWT, in which buyers can load contracted rates for
properties not available through GDSs, enabling booking either through their
agents or online booking tools. This provides all a company's travelers access
to rates that previously might have been available only to those in a country
where the rates were negotiated, according to CWT global director of hotel
content Clare Houlihan.
"Travel managers will have a clearer view of the
company's hotel spend with the increased volume of bookings made through one
channel, which will enable them to obtain even more fully consolidated reporting,"
Houlihan said. "Our hotel partners also have access to an extranet, so
they are able to share their distressed inventory rates to our CWT client base
and add additional inventory."
Similarly, American Express has been boosting content
through its Hotel Hub, particularly in such markets as France, China and India,
where much of the hotel content cannot be found in GDSs, said senior vice
president and general manager Michael Qualantone. In France, for example, Amex
has been able to aggregate more than 90 percent of the country's properties
through Hotel Hub.
"It's been a major investment, improving the access to
content and providing a rich list of information, meeting what we see as local
and personal needs," Qualantone said. "It's allowed us to increase
hotel attachment rates. We've seen 30-plus percent increases in some
cases."
The work also has included negotiations with chains and
select local properties to provide discounted rates for small and midmarket
companies that do not have negotiating leverage in specific regions, he said.
Amex also is working to integrate the tool with various online booking tools, Qualantone
added.
He acknowledged that travelers' ability to find better rates
through other sources erodes confidence in booking through established
channels. "Our objective is to bring so much content into an aggregated
display so there's no reason to shop around," he said. "Chasing rates
takes more time, whether it's the travelers or travel counselor is doing it.
Our customers want us to do more to help control their spend, to the degree
that we can provide confidence that we have access to those better rates."
At HRG, automated systems continually check online booking
sites and hotel websites for comparisons with the rates offered by the TMC,
said global director of hotel relations Margaret Bowler.
Meanwhile, mobile booking options are expanding for business
travelers. Most multibrand hotel companies—including InterContinental Hotels
Group, Hyatt Hotels, Starwood Hotels & Resorts, Choice Hotels International
and Marriott International—provide mobile booking options that allow travelers
to access corporate rates with the proper code.
Even travel buyers with tightly managed programs should be
watching these booking alternatives as they emerge, in terms of their impact on
booking behavior and the parity between negotiated rates and those available
through travel management companies.
Source: The Beat