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Tripbam's Steve Reynolds talks:
Tripbam founder and CEO Steve Reynolds shared with BTN editor-in-chief Elizabeth West insights into his product's recently released features and what is coming down the pipeline.
BTN: The ability to realize immediate savings via reshopping and rebooking is a big deal for Tripbam users, but the effect the data has had on the hotel procurement process, even if the rebooking isn't triggered, is more transformational, I think.
Reynolds: Yeah. Say [they] have a negotiated rate of $189. [We're] shopping away and see the best available rate based on the criteria set is $229. [The company] saved $40 a night with that corporate deal. It's measurable, quantifiable and as accurate as can be. We add it up for the entire hotel, and I can tell you exactly how much you saved by having a contract with this hotel and what percentage discount you actually received. What's more interesting is when it's the reverse. You did a deal, but your travelers could have paid a lot less. Why do you have a deal with this hotel? Our analytics highlight this situation. Typically, we find clients are paying 10 to 20 percent over the lowest qualified rate in these cases. When that's brought to the travel manager's attention, they'll go in and say, "This is stupid. We'll just cancel the contract, or you need to give me a rate of $149 if you want to stay in the program."
BTN: What kinds of companies are getting the nonbeneficial deals?
Reynolds: It's more about travel manager diligence. The ones on their game have fewer bad hotels than others. I don't know how they were benchmarking it in the past. They just know what a good rate is, and they negotiate hard to get it. It's the ones who just go, "I'm going to hire a consultant. I'm going to write them a check. They told me the rates are good. I trust them. I'm done." And a lot of the consultants really don't know, either, because they're going off their own internal benchmarked data, which is usually negotiated rates they've gotten for other clients, which are also bad: "Everybody gets $189. I guess that's the rate." We're calling BS on that. [Travel buyers who use Tripbam this way now] can quantify: "I've saved $2.5 million for my hotel program. Now it's measurable. I can get my bonus."
BTN: What other performance measures are you tracking?
Reynolds: A new Tripbam capability is LRA Enforcement: We track the hotel's last room available performance on every single booking. [All the hotels say they've given their corporate clients] LRA, but nobody measures to see if they're actually getting their deal. On every single booking—we call it an availability audit—we check to see that. [Tripbam may notice that] the traveler is not on a negotiated rate. [Why?] Is the bed type, room type, everything available that meets the contract for the client but the rate has just been turned off? No [longer]. If there's a standard room king bed, you're in [via Tripbam's service]. We're starting to see the LRA performance go up. We grade hotels on those two factors [on behalf of travel managers]: Are you giving me a good discount and am I getting it a high percentage of the time?
BTN: How many hotels are you grading?
Reynolds: Roughly 120,000. It's pretty much the corporate market in the U.S., Europe, Canada. We draw [an LRA performance] line at about 85 percent; if you drop below it, we start emailing, if the [travel manager is onboard], their national account manager, the revenue manager, the property sales guy, whoever wants to know. If you just send it to the revenue manager, he's just going to ignore it. I need to bug everybody around him to go knock on his door and say, "Bob, you gotta stop. You can't turn off IBM's rate anymore."
BTN: Are these people not talking to one another internally?
Reynolds: They're talking, but one of them is not listening. If we can get your LRA performance [to move from] 60 percent to 80 percent, you'll see [the savings] trend up rather quickly. [Improving] LRA performance drives double the savings, and it makes your hotel program much more valuable.
BTN: What's the commercial structure for your customers, and are they opting out of any of the features?
Reynolds: The client will tell us the hotels they want to monitor [for LRA performance]. Most of them are checking the box [to monitor] all hotels with a low LRA score. We haven't had anyone turning monitoring off yet. If you do, the hotel will creep back into their old habits. [The revenue manager's] bonus is based on average daily rate. If [that person turns] off the corporate negotiated rate, the hotel's ADR goes up. Travel managers know it's a problem but not how big a problem and weren't sure which hotels were really violating it. By solving the problem, travel managers have more confidence in their hotel program, add more preferred properties, save more money for the company and provide travelers more choice.
BTN: What else do you have in the pipeline?
Reynolds: [Dynamic Sourcing] is what I'm announcing at [BTN Group's] Innovate [conference in October. If] you've got 1,000 room nights in Boston, we can tell you, "If you had [a preferred hotel], you would save $62,000. Let's go get one." The buyer can click a button, and here are all the [Tripbam] A-rated hotels around where they need them in Boston that meet their criteria. We've got TrustYou scores, star ratings, locations, all kinds of stuff. They click a button, and we send [an RFP with number of room nights] to the hotel, but it's not the back-and-forth kind of negotiating that everybody is suffering with. We know the rate or the discount that is competitive in the market, so the hotel gets this email that says, "Here's the deal. Take it or leave it." It's one click on both sides.
You don't even know the room [dates]. That's just to tell them, "This is a pretty decent-size client. You want to deal with this client." So you'll say, "Look, I have 1,000 room nights in the market, I need a rate of $189 or a dynamic discount of 26 percent. I need the cancellation policy to be day of check-in. I need breakfast, Wi-Fi, parking. And I need an LRA percentage better than 85 percent." Done. No blackout dates. No seasonality. I don't need 750 fields. We're sending it directly to the property. Properties will eat it up. Today it's too expensive and time consuming [to negotiate at the property level], so everybody has been shrinking their preferred hotel program. If you [have a method that's] efficient, you can expand [your preferred hotel program]. Once you click the button and accept it, it goes in our system, it's automatically audited, it's loaded in the GDS, it starts showing up in Concur the next day. We send rate-load instructions to the hotel, and the next day we start auditing and ask, "Did you load the rate, and did you load it correctly?" We start following up. This is Tripbam 2.0.
BTN: What's coming up as far as your company structure?
Reynolds: We're venture capital backed. The VC guys are usually in for five years, and then the private equity guy comes in. We'll probably do a deal in Q1, but it's not going to change anything. It just means I'll have more money to play with. It's just different money. We did our first round five years ago and haven't done anything since. We haven't had to. We are expanding in Europe now: [We're planning a regional] headquarters in London [and expanding] mostly in the U.K., France and Germany—the bigger markets—and some secondary markets, as well.
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