Supplier Seller's Market Showing Signs Of Softening

<B> Supplier Seller's Market Showing Signs Of Softening</B>

By Cheryl Rosen

Corporate travel buyers and sellers are beginning to report trace evidence of what analysts have been predicting will be a softening in the lengthy hotel seller's market. At Hewlett-Packard, for example, Lea McLeod reported, "it's interesting that this year we're being contacted by hotels that declined to bid on our program last year. Where before hotels gave rates to X number of corporate accounts, now they are raising the number--and one can assume that's an indication of the softening of the market. Hotels are calling us looking for business."

On the supplier side, few were anxious to go on the record with reports of falling occupancies or rates, though one hotel salesperson on the NBTA trade show floor acknowledged that early bookings for the first quarter of 2000 are soft, particularly in the group market.

Hyatt vice president of individual sales Ty Helms said the company is seeing some softness "market by market. There's no question some are feeling it a little more, while others are going up."

Where Hyatt traditionally has negotiated with about 70 corporate accounts, "for 2000, we are trying to broaden that base," Helms said. "We are looking at companies of what you might call secondary and tertiary size, and hoping to provide them with similar service. We're learning there are a lot of different levels in the marketplace."

At Philip Morris, travel manager John Lowry said, "Q1 2000 is looking soft because of Y2K concerns. We moved some major conventions that usually take place in January and February to the end of 1999, but I think most of the business will move to March. Many companies have guidelines to try and reduce trips--our average trip length has increased, and that's a general trend, and the average car rental length has moved from 1.9 days to 2.2. I think 2000 will be a posturing year. Nobody's sure about what will be, and hotels have learned that they can't gouge customers when occupancies are high and expect them to not remember when occupancies are lower."

But most in the industry were surprised at the idea of Y2K concerns affecting corporate travel. Said Jim Miller, vice president of sales for John Q. Hammons Hotels Inc., which owns 50 hotels in 38 second- and third-tier cities, "There are some obvious concerns out there about Q1 2000, at least in January. But I must say we're seeing a lot of activity in December 1999, with a lot of software companies holding rooms from Dec. 10 to Jan. 10, so they can be ready to station people near their customers. We're also seeing a lot of January meetings shift to February or March. Typically the first two weeks in January, when people are just coming back from the holidays, are a slow time for sales--and therefore a good time for corporate strategy meetings to plan for the year ahead. We find them just backing those up a little into December. I'm telling my salespeople to be very aggressive about pricing the first two weeks in January."

Agreed Lynne Ashmead, administrative services director at CSX Transportation in Jacksonville, Fla., "We're acquiring part of Conrail, so with the synergies there should be a slight reduction in the overall hotel volume of the two companies. But we don't have any plans to move meetings out of January. With all the hype, perhaps it's better not to take a chance on traveling the first week or two, but that's a slow travel period anyway."

One travel manager noted that her department is doing a lot of Y2K planning, though the focus is not on cutting back travel. Instead, she is recycling the time and thought she is putting into millennium planning to develop a broader disaster planning effort for the travel department.

"I really think there's no reason not to hold a planned meeting in January, though we are putting in extensive Y2K plans for the travel and meeting departments," she said. "We have an extensive checklist with our agency, and have arranged to have the lead operations person go to each office and onsite and check out all the equipment. We have pre-emptive plans, in anticipation of Y2K--a weekend-of plan, a day-of plan and a post-Jan. 1 plan. This opened up a whole disaster planning thing for us--it made us think, what if there's a fire in our travel office? What if there's an earthquake? Travel is too important to our business for the department not to be available to our travelers. Our business thrives on travel.