With the 2018 hotel RFP season underway for many in the
corporate travel buying community, an analysis from New York University's Bjorn
Hanson pegs the expected U.S. corporate rate increase for next year to be in
the 2 percent to 3 .5 percent range.
Hanson, a clinical professor at the NYU School of
Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism, said
that while hoteliers are still operating from a position of strength, with
occupancy lingering at a record 65.5 percent, buyers are gaining ground at the
negotiating table for 2018.
In recent years, corporates' negotiated rates increased
significantly as hoteliers anticipated average daily rate growth that never quite
materialized. In 2016, negotiated rates rose 5.75 percent to 7 percent, and in
2017 corporate rates grew 3 percent to 4 percent. Hanson said corporate travel
buyers and convention planners “will seek to recover some of those higher
rates” as a way to make up for overpaying in recent years.
He said other factors that will impact negotiations for 2018
include the specter of "member
rates." Some of the major hotel companies introduced these during the
past year to push back against online travel agencies and to grow their loyalty
programs. Additionally, the 48-hour cancellation
policies Marriott International and Hilton introduced this summer could
prove a point of contention with buyers. A separate study from Hanson found
that stricter cancellation fees will contribute to the record $2.7
billion that U.S. hotels are projected to collect in fees and surcharges in
2017.
Airbnb's efforts to penetrate the corporate travel market
via its Business Travel Ready listings, travel manager dashboards, partnerships
with the three mega travel management companies and data sharing with risk
management providers are
paying off and also should play a role in 2018 corporate rate negotiations,
Hanson said, as more companies use Airbnb inventory to supplement hotel
programs.
He said corporate and contract rates represent
almost 20 percent of occupied U.S. room nights and nearly 30 percent of U.S.
lodging revenue. His analysis is based on selected interviews with hotel
industry executives and corporate travel executives, on hotel industry
financial data, on media releases and on information from hotel and brand
websites.