Travel managers have long struggled with hotel rate parity, accessing accurate rates and amenities in corporate booking portals, and digesting all the associated data, but why? Speakers here at The Beat Livelast month discussed the challenges and suggested some hurdles are the result of a heavily fragmented hotel selling environment and reliance on airline technology--namely global distribution systems. Solutions remain elusive.
Carlson Wagonlit Travel president of suppliers, products and technology Andrew Winterton, claimed that 50 percent of client hotel bookings in North America are completed through the travel management company. The remainder of bookings are made via online travel agencies, direct phone calls to hotel properties and other channels. One reason why travelers book outside designated corporate channels is that they "have the perception that the OTA rates are better than the TMC consortia rate," according to Winterton. CWT clients save 21 percent on average through the TMC channel versus spot buying via OTAs, Winterton said, but travelers don't always know that. Steps should be taken to ensure they are using "the right rates in relation to their corporate leverage."
For Marriott International, "there will be continuing pressure" to respond to rate fluctuations, according to senior director for B2B e-commerce Geoff Heuchling. There are "3,500 different general managers setting rates and inventory" across Marriott's system. "We ultimately have to do what our owners want us to do, and we'll respond as we need to. We have tried very hard to get good rate integrity across the various channels, and we are proud of what we have done. We want our corporate customers to buy the way that the travel managers want them to buy. Fortunately, we are big enough to [overcome rate integrity problems] with one of our brands or with one of our owners, but not everyone has that clout."
Another challenge is the lack of inventory descriptors within corporate booking tools. "We are living on airline systems, which is what makes it a little tougher for us to manage and work better for our customers," said Heuchling. "We spent a lot of money trying to develop this central database to push some of this data out, but it's a question of what [the GDSs] can receive and what they can display. There may be better compliance if some of the booking tools were easier to use or offered that same level of content. We can push it out; if they can take it, that might be at least part of the solution."
Winterton agreed. "We are using airline infrastructure to distribute hotel inventory and that is the biggest broken wheel that we have as an industry," he said. "It is incumbent upon us to reuse the existing infrastructure and actually try to do it intelligently so that we can get much better distribution that allows people to get a much greater understanding of what they are buying."
CWT is "trying to make sure that [it has] the same or consistent features available to users," Winterton added. "To date, we have not managed to do that. It's very much on our agenda to try and drive that, otherwise we are not gong to get the game-changers that we are talking about."
'Horrific' Data And Other Reporting Challenges
Because some travelers continue to book outside approved corporate channels, travel buyers tend to look to the corporate card to gather spend data, but Lanyon COO Michael Boult described such data as "horrific."
"If there are 50,000 hotels in America, there are 50,000 different merchants and different descriptions of a property," Boult said. "Credit card information doesn't synch up and it doesn't connect."
Unlike airlines that use ARC standards to report data through GDSs and on credit cards, hotels have no such reporting methodology.
"With hotels, it is normal to pay at point of use," said Winterton. "You would all have the same issues in the airline industry if we all showed up to the airport to pay with our credit card as we were boarding the aircraft or after you get off."
"The property management system is where all of your charges live and there is no standardization among room types or room codes, whether you bought a bottle of water at the mini bar or you bought a movie," said Sabre Hospitality Solutions COO Stephen Fitzgerald. "There is no conduit back out through the PMS through the central database in a reporting structure--it doesn't exist."
When hotel properties receive direct bookings, they may not know from which corporate account the traveler is from, according to Marriott's Heuchling. "That is part of the challenge that all the clients are facing," he said. "That's where the opportunities are. Because [hotels] are the soft underbelly of the travel distribution business, there are a lot of opportunities to look for cost savings for both customers and hotels in that respect."
Eyes On Compliance, Audits
Conference speakers also touched on effective ways to monitor rising hotel rates and keep them in check.
"The RFP is the least important of all the things you could do to manage the spend," said Lanyon's Boult. "You can't control the market price; any one corporation can't move a market. They can influence that property potentially, but we are talking about big macro numbers. We are actively talking and encouraging our clients to fixate on things that they can change: compliance management. Fifty percent of the spend is flowing somewhere else, and of the 50 percent that actually does land inside the TMC, probably 50 percent of that is with a nonpreferred supplier."
Said Winterton, "Even though there is a large number of [hotel] programs, we are not really mining the full opportunity for managed travel. A lot goes to the request for proposal process or the negotiations, which can probably deliver 5 percent or 6 percent of the savings. There's another 10 percent to 12 percent that comes from operating within" a compliant, managed program.
Sabre's Fitzgerald predicted 2011 "will be really the year that [hotel auditing] tools will gain some traction in the market," because travel managers will hone in on compliance, rate parity and rate accuracy more than in recent years as pricing stabilizes and rate renegotiations cease. "We saw hotels re-offer a lower price even after negotiations," Fitzgerald said of the conditions during the economic recession. "We are going to get back into an environment where corporations, travel management companies and agencies are going to want to deploy audit tools that are available now to make sure that the price that they negotiated is bookable."