Business Travel News
Business Travel News
  • SECTIONSOpen Menu
    • Transportation
    • Lodging
    • Payment & Expense
    • Technology
    • Distribution
    • Meetings
    • Global
    • Management
    • Travel Procurement
    • Voices
    • Recent Issues
  • VOICESOpen Menu
    • Expert Q&A
    • Podcasts
    • OpEds
    • What to Watch 2022
  • RESEARCHOpen Menu
    • BTN's 2022 Essential OBT Guide
    • Corporate Travel 100
    • Corporate Travel Index
    • Expense Manager Report
    • Small & Midsize Enterprise
    • Salary Survey
    • Strategic Meetings Report
    • VIEW ALL
  • WEBINARSOpen Menu
    • View All Webinars
  • EVENTSOpen Menu
    • Webinars
    • Business Travel Hall of Fame
    • Business Travel Intelligence Summit
    • Business Travel Lodging Summit
    • Business Travel Show
    • Business Travel Tech Talk
    • Business Travel Trends Forecasts
    • DEI Symposium Series
    • Entertainment Travel Summit
    • Global Travel Risk Summit
    • Government Travel Summit
    • Innovate
    • Strategic Meetings Summit
    • Sustainable Business Travel Summit
    • VIEW ALL EVENTS
  • RESOURCESOpen Menu
    • Business Travel Buyer's Handbook
    • Business Travel Buyer's Techbook
    • Corporate Travel Index Calculator
    • Data Sources: The Reference Guide
    • White Papers & Case Studies
    • Influencers
    • Webinars
    • Videos
    • Hotel Search
  • SECTIONSOpen Menu
    • Transportation
    • Lodging
    • Payment & Expense
    • Technology
    • Distribution
    • Meetings
    • Global
    • Management
    • Travel Procurement
    • Voices
    • Recent Issues
  • VOICESOpen Menu
    • Expert Q&A
    • Podcasts
    • OpEds
    • What to Watch 2022
  • RESEARCHOpen Menu
    • BTN's 2022 Essential OBT Guide
    • Corporate Travel 100
    • Corporate Travel Index
    • Expense Manager Report
    • Small & Midsize Enterprise
    • Salary Survey
    • Strategic Meetings Report
    • VIEW ALL
  • WEBINARSOpen Menu
    • View All Webinars
  • EVENTSOpen Menu
    • Webinars
    • Business Travel Hall of Fame
    • Business Travel Intelligence Summit
    • Business Travel Lodging Summit
    • Business Travel Show
    • Business Travel Tech Talk
    • Business Travel Trends Forecasts
    • DEI Symposium Series
    • Entertainment Travel Summit
    • Global Travel Risk Summit
    • Government Travel Summit
    • Innovate
    • Strategic Meetings Summit
    • Sustainable Business Travel Summit
    • VIEW ALL EVENTS
  • RESOURCESOpen Menu
    • Business Travel Buyer's Handbook
    • Business Travel Buyer's Techbook
    • Corporate Travel Index Calculator
    • Data Sources: The Reference Guide
    • White Papers & Case Studies
    • Influencers
    • Webinars
    • Videos
    • Hotel Search
Business Travel News
  • Business Travel News on Twitter
  • Business Travel News on LinkedIn
  • Business Travel News on Facebook
  • SECTIONS
    • Transportation
    • Lodging
    • Payment & Expense
    • Technology
    • Distribution
    • Meetings
    • Global
    • Management
    • Travel Procurement
    • Voices
    • Recent Issues
    Subscribe to NewslettersBTN DailyBTN GlobalBTN Travel ManagementTravel Procurement
    Subscribe to Print IssuesBusiness Travel NewsTravel Procurement
  • VOICES
    • Expert Q&A
    • Podcasts
    • OpEds
    • What to Watch 2022
    John PelantSustainability Reporting, Omnichannel Experience Top CWT's Investment Priorities
    Ralph KaiserUATP Stays Focused on Unused Ticket Management, Adds Full PSP Offering
    Francis DavidsonAfter Public Debut, Sonder CEO Details Push for Corp. Travel
  • RESEARCH
    • BTN's 2022 Essential OBT Guide
    • Corporate Travel 100
    • Corporate Travel Index
    • Expense Manager Report
    • Small & Midsize Enterprise
    • Salary Survey
    • Strategic Meetings Report
    • VIEW ALL
    Annual Supplier Ratings• Car Rental Survey & Report• Hotel Survey & Report• Airline Survey & Report
    Special Reports• Pandemic-Era Traveler• Sustaining the Future
  • WEBINARS
    • View All Webinars
    Are One-Day Business Trips History or Reality?

    Wed, May 11th, at 1:00 PM ET
    Sponsored by: Enterprise Holdings Inc.

    Building a Sustainable Travel Initiative

    Tues., May 10 at 12pm ET / 9am PT
    Sponsored By: TripActions

    Business Travel: Revive, Restart, Revolutionize?

    Thurs., May 5 at 11am ET / 8am PT

  • EVENTS
    • Webinars
    • Business Travel Hall of Fame
    • Business Travel Intelligence Summit
    • Business Travel Lodging Summit
    • Business Travel Show
    • Business Travel Tech Talk
    • Business Travel Trends Forecasts
    • DEI Symposium Series
    • Entertainment Travel Summit
    • Global Travel Risk Summit
    • Government Travel Summit
    • Innovate
    • Strategic Meetings Summit
    • Sustainable Business Travel Summit
    • VIEW ALL EVENTS
    BTN Group Symposium: Advancing Traveler Health & Wellness

    Virtual Event - May 26, 2022

    8th Annual Strategic Meetings Summit New York

    New York City, NY - June 6, 2022

    Business Travel Trends and Forecasts Boston

    Hilton Boston Logan Airport - June 9, 2022

    10th Annual Business Travel Trends and Forecasts Atlanta

    Omni Atlanta Hotel at CNN Center - June 15, 2022

  • RESOURCES
    • Business Travel Buyer's Handbook
    • Business Travel Buyer's Techbook
    • Corporate Travel Index Calculator
    • Data Sources: The Reference Guide
    • White Papers & Case Studies
    • Influencers
    • Webinars
    • Videos
    • Hotel Search
    BTN CTI Calculator

    Filter in or out as many as 200 cities, as well as hotel and car rental class and meals of the day and watch as the per-diem calculator automatically adjusts per diems to your program. Drill down into cost breakdowns and export the results.

  • Business Travel News Supplier DirectorySUPPLIER DIRECTORY
T R A V E L   P R O C U R E M E N T

Procurement

GBTA's Hotel Rate Freeze Advice Ignites Controversy

By Donna M. Airoldi / May 04, 2020 / Contact Reporter
Share

The Global Business Travel Association is endorsing a postponement of the 2020 hotel request-for-proposals process until 2021 because of the coronavirus pandemic, and "encourages hotels to roll all 2020 rates for 2021," the association announced last week. The response in the business travel industry has been mixed, not just regarding GBTA's position to roll rates over, but also that it offered a position at all.

GBTA normally does not get involved in the hotel RFP process other than providing a template of suggested questions buyers can ask suppliers, but "we made a special exception this year … [and] got involved at the request of top travel buyers and the top 50 hotel brands," said GBTA CEO Scott Solombrino in the announcement. "With so many people furloughed or laid off, and with so much uncertainty about when travel can truly restart, buyers and sellers have neither the resources nor the knowledge right now to develop a mutually beneficial hotel RFP."

While no one BTN spoke with for this report disagreed that the travel and hotel environment is challenged at the moment, some thought GBTA's announcement was premature given that the typical RFP season doesn't get going until August or September, when the hotel landscape might look different. Some also noted that GBTA is not an advisory organization.  

"I think the intent was they are trying to be helpful, but there are people raising different theories on their intent," said Laura Kusto, senior director and global hotel practice lead for Advito and Stay by BCD Travel, which on Thursday issued a statement that while it agrees with some of the opinions expressed by GBTA, it does not support the recommendation to freeze rates into 2021. "We see another path that offers a lot more flexibility to take more of an active approach to managing programs coming out of this. The [GBTA] statement doesn't allow companies any flexibility in taking ownership of their programs," Kusto said.

Program Erosion?

According to several experts, rolling hotel rates over could erode the value of the corporate travel program.

"GBTA needs to support their members, but I'm really struggling with what they are saying. We need to give buyers a choice," said Areka Consulting managing partner for the Americas Louise Miller, who voiced concern about program credibility given that static negotiated rates very likely will be higher than spot rates in the market going into next year. 

"Hotel attachment is barely 55 percent in the U.S. and barely 25 percent in the rest of the world," Miller said. "If you roll over your rates, where you have static rates, there is a very good chance they will look high a lot of the time. That's putting the [program manager and the travel management company] in a bad situation. When travelers see lower rates in the online booking tool, they'll say, 'I can't trust the TMC, I can't trust the program, I beat the rates every time.' It sends the wrong message."


GBTA needs to support their members, but I'm really struggling with what they are saying. We need to give buyers a choice."

— Areka Consulting's Louise Miller

Consultant Neil Hammond, partner at GoldSpring Consulting, agreed, especially now that buyers will be pushing harder to address health and safety concerns in their programs. "Buyers are likely to find themselves with a new stronger mandate for compliance in a program and can bring that into the conversations with hotels and provide support for the relationship," he said. "Whereas leaving redundant rates will erode support for the preferred program."

He posited that programs that still have fixed rates with last-rate availability wouldn't be suited to a commercial environment in which 2020 rates were rolled into 2021, and predicted those programs would be switched to use dynamic rates. Amenities often included in programs with static rates, such as use of the fitness center or breakfast, might not even be available or desirable, he said, adding that some preferred hotels may be closed and need replacements. 

There's also the issue of different blackout dates in a new year, Hammond said. Those are reasons why "rolling over rates is not as simple or as desirable as you may think," he said. "You need to optimize the program for the new environment. I'm not saying a full-blown RFP is the solution, but there certainly needs to be engagement between buyers and suppliers. So whether you call it an RFP mechanism, there needs to be a mechanism to negotiate contracts and to exchange information. And the GBTA RFP template is still the best mechanism to define the hotel program."

There's also concern about eroding the value of the corporate travel manager, said Tripbam CEO Steve Reynolds.

"Confidentially, we've been hearing from folks on [GBTA] committees that [the position in Solombrino's statement] is not the position of the committees," Reynolds said. He said his sources were aligned with their duty to their own corporations and paraphrased their words: "We get paid to get the best value for the company. If we tell our bosses we'll just let things ride and not get significant discounts, that rates negotiated in 2019 are no longer valid, [that] I won't get negotiated rates until next year and we won't have discounts for probably two years or more, [they] would ask, 'Why are you here? What are we paying you to do?' "

The Market Is in Buyers' Favor

The counterargument is that "we don't want to kick the industry while it's down," Reynolds continued. "But business is business. When was the last time a hotel came to a struggling business and said, 'We'll keep all your discounts in place and won't change anything even though volume is 90 percent lower than before?' I've never heard of that happening." 

Reynolds argued that if hotels don't want to give discounts, they won't, but those that do will get volume and market share in return. "I don't see how it makes sense for either party to not sit down and talk about this and figure out [their] new relationship going into the latter half of this year and next year."

Hotel executives would like to keep their pre-Covid-19 crisis average daily rate as long as possible, because that was the rate point created at the end of a long growth cycle, said HRS CEO Tobias Ragge. But 60 percent of HRS clients, according to a spot survey Ragge said HRS conducted last week, see an opportunity to negotiate for lower rates and better terms and conditions, and 50 percent said they anticipate issuing RFPs in order to help do that.

"From the corporate perspective, we have around 250 global companies most of which are in the Fortune 500, and about 60 percent are saying they see an opportunity and are being asked internally by not only their [chief procurement officers] but also their [chief financial officers] to make use of the market situation, which right now at the end of an 11-year-long boom is in the benefit of [the corporate's] side," Ragge said. "They think it's their opportunity to do the right thing for their corporation and to basically get better terms and conditions based on the current market after having had to accept all kinds of rate increases for the past 11 years."

GBTA referred to its own April flash poll to defend its RFP advice. The association said its poll showed "more than 90 percent of buyers favored a postponement of the RFP process because so many key individuals had been displaced by the Covid-19 pandemic." 

Areka's Miller said that her research with buyers contradicts GBTA's conclusion. "I've spoken with both customers and prospects who are saying they either don't have the resources or are so unsure they'd rather just delay, meaning not decide today," she said. "It doesn't mean they'll all roll over their programs to 2021 and not change anything."

GBTA Responds

GBTA sent BTN a statement when asked to respond about the disagreement about its stance and role. Their response has been lightly edited for clarity:

"As a global industry association, GBTA represents the entire business travel industry, and the needs of both the travel buyers and suppliers. GBTA [was] approached by members from both the buyer and supplier side to discuss the impact of the hotel RFP process during this pandemic. As a member association, we took responsibility to look at ways to help the buyer-supplier relationship through this process, and [spent] several weeks conducting research, talking to members and committee[s] in each of the regions.

"The coronavirus has caused turmoil in our industry; these are unprecedented times. No one can predict the true impact, or duration of the disruption, and certainly not before the peak hotel RFP window of July to September. It, therefore, seems sensible to postpone the RFP process to ensure the future success of the business travel industry. If hotels are unable to fulfill the RFP requirements this summer, this would damage long-term partnerships and managed travel programs globally." 

"Our hope is that all parties will agree to roll rates over for this year so that buyers can continue to manage their travel programs, ensuring the safety of their travelers, which has to take priority for the foreseeable future. This way we can preserve global travel programs beyond the pandemic. As a non-governmental organization, GBTA is neutral and is making this recommendation on behalf of members only."

While the assessment may sound right to many industry professionals—both buyers and suppliers—GBTA's conclusion, or "hope," is the sticking point.   


Our hope is that all parties will agree to roll rates over for this year so that buyers can continue to manage their travel programs, ensuring the safety of their travelers, which has to take priority for the foreseeable future."

— GBTA statement

According to Kusto, that stance lacks needed ingenuity. "The options people have been considering are, do like you've done it or don't do it at all," Kusto said. "There are plenty of options in the middle."

Kusto has told clients who had been preparing to launch an RFP to pause because it is a bad time to send one, since so many people are furloughed and unable to respond. "That doesn't mean postpone for a year," she said, adding that there are plenty of other issues that need attention. "We're advocating that companies immediately take a look at existing programs. … You have to take into consideration that static rates will be noncompetitive, but they're still loaded, so how do you optimize the booking tool to account for that? What can you do right now?" 

Kusto also is trying to shift some clients who still contract based on the calendar year to go off-cycle, and noted that the company's strategy the past couple years has been to suggest clients reduce the size of their hotel programs, and to diversify the program by adding more dynamic rates, quitting sourcing rates everywhere and using rate targets.

Buyers BTN spoke with were happy to push the pause button on hotel RFPs, and credited GBTA for validating the need to do so. Their action plans after the pause, however, are more nuanced.

"I'm glad GBTA came out with this," said S&P Global director of global travel and meetings and global procurement leader Ann Dery, who has extended her hotel contracts through either the end of 2020 or the first quarter of 2021. "This is one of those moments when partnerships matter. It's important that corporate buyers respect what has happened to supplier partners. It's a challenging time. From a procurement perspective, you can't run an effective RFP if there are no recipients on the other side. Given the [hotel] closures and not knowing how many will reopen, I don't think any hotel can give adequate pricing beyond December 2020." 

Dery also noted that it's because of good partnerships that she believes when travel does ramp up, "those hotels with a tremendous amount of [our] business, if my negotiated rate is not competitive, I expect them to reach out to me and let me know." Still, she added that she would have her agency conduct an audit of the top 50 hotels globally to ensure S&P Global's rates were on par with the best available or cheaper. "We're going to have to be very flexible and be able to pivot any strategy we thought we could use with the new normal."


It's important that corporate buyers respect what has happened to supplier partners. It's a challenging time. From a procurement perspective, you can't run an effective RFP if there are no recipients on the other side."

— S&P Global's Ann Dery

EAB leader of both travel and IT Steven Mandelbaum already was taking a hands-off approach to hotel RFPs, and said "anything that will hasten the demise of the hotel RFP is good, even if only temporary." He added that he thinks it makes sense to postpone. 

"The market will bear what the market will bear," he said. "I don't think anyone knows what volumes will look like or what hotels will look like." He did project, however, that market rates will be better than corporate rates for the foreseeable future, but he said there are tools are out there to take advantage of that. "I don't know if there are many corporate programs today buying corporate rates when there are lower [best available rates] in the marketplace. I don't think it happens much anymore." 

Changing Priorities

When travel gets going again, buyers and suppliers will have to address a drastic shift in priorities: namely, cleanliness and safety. Rather than obsessing over RFPs, travel managers should be working to make sense of the new programs hotel companies are launching and figuring out how to help travelers interpret them, Kusto said.

"Do you have a company policy on [cleanliness and safety]?" Kusto asked. "There is a tremendous amount of information we need to learn and make sense of." 

Kusto recommends travel managers "button up" their programs first and consider how policies and communications are configured in their booking tools, so they're ready to go when travel comes back. Only then should buyers consider releasing an RFP. 

Those buyers worried that not releasing an RFP right away undermines their value should instead focus their energies on solving emerging complexities and not on yesterday's routines, Kusto said. "As soon as travel comes back, [hotels] will want to support active travel," she said. And for markets where volume is lower, buyers should put rate targets in place. "I think the travel manager might be more needed than ever coming out of this," she said.

More Procurement
Related
Congress Passes Covid Deal With Travel Supplier Aid, Meal Expense Deductibility

The U.S. House and Senate on Monday approved the $900 billion Covid-19 relief legislation, which would...

Reports: U.S. Covid-19 Relief Deal Includes More PPP Loans, Airline Support

The $900 billion Covid-19 relief package agreed to by U.S. congressional leaders Sunday includes a...

Aon's Global Preparedness

Travel managers the world over shared the mad scramble to identify and repatriate business travelers...

Sponsored Content

We’re making history by making our carbon history
We’re making history by making our carbon historyBy United Airlines

We’re going beyond traditional carbon offsets and taking a more direct approach to making sustainable aviation the norm. KEEP READING

Duty of Care Due Diligence Requires Wider Scope
Duty of Care Due Diligence Requires Wider ScopeBy Qatar Airways

Travel professionals must do everything they can to demonstrate due diligence and widen the scope of what they do in the name of duty of care. KEEP READING

Don't Let NDC Take a Backseat in 2022
Don't Let NDC Take a Backseat in 2022By FCM

Get ready to tailor travel programs by leveraging NDC with your partners in 2022. KEEP READING

More Procurement Covid

Business Travel by the Numbers
Trump Ends Covid-19 Relief Package Discussions Until After Election, But Pushes for Airline Funds
Business Travel by the Numbers
Summer U.S. Covid Spread Scrambles Demand Forecasts

VIEW ALL
Subscribe to Our

Free Newsletters

pixel2

Click Here for our Terms and Conditions and Privacy Policy.

Business Travel NewsBusiness Travel News
  • About Us
  • Contact Us
  • Advertise
  • Editorial Calendar
  • Business Travel News on Twitter
  • Business Travel News on LinkedIn
  • Business Travel News on Facebook
BUSINESS TRAVEL NEWS
NORTHSTAR TRAVEL GROUP
Business Travel News
  • About Us
  • Contact Us
  • Advertise
  • Upload Print Ad Material
  • Purchase Reprints
  • Editorial Guidelines
  • Subscribe to BTN
  • Subscribe to Travel Procurement
  • Subscribe to Newsletters
  • BTN Europe
  • Privacy Policy
  • Terms & Conditions
Business Travel News
Business Travel News Travel Procurement The Beat
Northstar Travel Group
  • Retail Travel
  • Travel Weekly
  • Travel Weekly Asia
  • Travel Weekly China
  • TravelAge West
  • TravelPulse
  • TravelPulse Canada
  • TravelPulse Quebec

  • Hotel Investment
  • Burba Hotel Network

  • Travel Technology
  • Inntopia
  • Phocuswire
  • Phocuswright
  • Web In Travel
  • Meetings & Incentives
  • Northstar Meetings Group
  • Meetings & Conventions
  • Meetings & Conventions China
  • Meetings & Conventions Asia
  • Meeting News
  • Successful Meetings
  • Incentive
  • SportsTravel

  • Data Products
  • Agent Studio
  • AXUS Travel App
  • Intelliguide
  • travel42
Northstar Travel Group
Copyright ©2022 Northstar Travel Media, LLC. All rights reserved.    100 Lighting Way Secaucus, NJ 07094-3626 USA | Telephone: (201) 902-2000
RRManagement rrtestprocurement