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Omni Hotels this year is offering corporate accounts some assistance in encouraging travelers to book through preferred channels. Developed last year and already in use by more than 25 customers, the new program is designed to improve traveler compliance to preferred booking channels as it excludes negotiated rates from all booking channels not favored by managed travel programs.
As a result, those companies participating in Omni's Distribution Compliance Pricing program have another tool for keeping their travelers within the bounds of approved processes, generally through a preferred travel agency and/or self-booking tool. This allows companies to more thoroughly collect travel data and more effectively track their travelers' whereabouts. It also helps to prevent unauthorized use of a corporate account's preferred rates by unaffiliated travelers.
Other hotel companies including Hilton, Hyatt, InterContinental, Marriott, Starwood and Wyndham have either not formalized similar programs or did not respond to requests for comment. But if the positive reaction among some travel management professionals is an indicator, other suppliers soon may consider such a strategy.
Omni corporate director of national sales John Hackett said he was surprised to learn that no other hotel chains said they have presented such an option to their accounts. "Buyers in the past may have been afraid to give up the volume--for negotiating purposes--that was not coming through their global distribution system or through their preferred distribution source," he suggested. "Technology has driven compliance at incredible rates over the last five years and that is probably the catalyst to why this is now being widely accepted."
The Omni program stemmed from customer feedback and last year quickly gained momentum. "When we initially rolled it out, we were not sure what the customer response would be, but every global customer we spoke with on this topic saw immediate value in it," said Jesse Suglia, Omni global director of business travel sales. "The vast majority wanted it implemented the day we had the conversation. They jumped on it even more than we thought they would."
One such account is Pittsburgh-based Mellon Financial Corp., which emphasizes traveler security throughout its travel program. It now participates in Omni's program at those properties that rank among its highest-volume hotels.
"There was a belief that there was a relevant percentage of bookings that were either our travelers calling direct, or some that were questionable as to whether they actually were affiliated with Mellon," said Kenneth Knapp, the company's manager of corporate travel. "You don't like to tell people 'No' when they call to book a room but it just started making more sense. In some cases, people were getting low rates that they did not deserve, potentially impacting my ability to get a decent rate."
The hotel component of managed travel programs typically has lower compliance than others covered by corporate policies, including air, credit card and travel agency. According to an Aug. 2006 PhoCusWright study based on supplier interviews, the "corporate best practice" utilization of preferred airlines is 70 percent, while hotel program utilization averages "about half that."
"There are quite a few mavericks who go around the preferred booking channels and either call a hotel directly" or go onto hotel Web sites, said Denise Lodrige-Kover, vice president of business travel sales and strategic partnership accounts at Hilton Hotels. "We will load rates in whatever distribution channels our customers advise us to. They usually want them in all booking channels. It would increase their costs if they did not have access to negotiated rates in all channels."
Lodrige-Kover did not disparage Omni's strategy, but suggested it would not be as suitable for a chain with Hilton's scope, complexity and "immense amount of distribution."
There are 2,300 Hilton properties (flagged as a variety of brands) in the United States alone, while Omni has just 37 in North America.
With the smaller portfolio, Omni saw an opportunity to formalize a program and help accounts attain higher compliance, thereby building more value into agreements at a time when many clients are bracing for still-higher lodging costs. "While other brands might have adjusted simply for rate growth, we wanted to maintain relationships that would be with us for a long time," Hackett explained. "The hotel industry as a whole is becoming more creative. It is not just about rate."
Hackett suggested Omni actually leaves some money on the table by presenting the Distribution Compliance Pricing option to customers. When a traveler calls directly, "we could just book at the standard corporate rate or higher" he said. "But that is not the name of the game. We want to be a good partner."
Mellon's Knapp praised Omni for that perspective, especially given the overall strength of the lodging sector. "It has been a challenging time for hotels to maintain positive relationships with corporations, and attempt to get an increase in rates without doing so at the detriment of the corporate buyers who are trying to hold the line as best they can. It has been an artful dance and the Omni folks have done it well by identifying this kind of thing. The alternative may have been to jump up rates even higher than they were to compensate" for improper use of negotiated pricing, Knapp said.
To implement Distribution Compliance Pricing, Omni needed to discuss the details with personnel at individual properties and to revise scripts used by reservationists. Now, when travelers call Omni's toll-free number and ask for their companies' negotiated rates for a property covered by the program, they are told to contact their travel agency or corporate travel department.
Such a process may raise questions among travel managers who want their companies' preferred hotels to offer preferred rates to travelers who are in a pinch, because of itinerary changes or other unforeseen circumstances. To that point, Hackett said, "We are in the hospitality business. When a traveler is in trouble, nine times out of 10 we'll be able to make the right thing happen. We manage the rule and then make exceptions to accommodate."
On the account side, travel managers seeking to implement the program--which now is available to any interested corporate client--must educate travelers and travel agents. Said Knapp, "It is about communicating another reason why you should call the agency [or use the corporate self-booking tool] because in some cases you will not get the Mellon rate."
For Mellon, the program was implemented at the beginning of 2007 and therefore is too new to have driven any measurable compliance improvements. But Omni "is pretty confident that there will be a net effect that will help compliance at the end of the day," Suglia said. "Our main concern is traveler confusion, but we have not had any significant pushback."
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