The crystal ball of 2021 is a little cloudier than many travel buyers would have hoped at the start of the year but with the vaccine rolling out and the hard slog mostly behind us, there’s reason to anticipate a major uptick from 2020 levels, when our industry was operating at about 20% of its usual volume. Exactly when and how much demand will return will partly depend on the success of vaccine programs and traveler's willingness to hit the road.
In the meantime, how do buyers make sure they’re ready with a safe, reliable, and efficient program to help their people get back to business?
Some industry experts have suggested taking advantage of a once-in-a-lifetime opportunity to push hotels for massive concessions. Others have advised playing it safe and taking a pass on the traditional, annual RFP process, while some recommend abandoning RFPs and static rate structures altogether, in favor of dynamic pricing. It’s no wonder buyers are baffled. Here are three ways to cut through the noise and make sure you’re ahead of the curve in 2021.
1. Stay agile - The greatest degree of flexibility — both in terms of availability and pricing as the market comes back — is the only way clients, travelers and hoteliers can realize maximum benefit. Hotel procurement strategies revolving around an annual RFP exercise have a diminished place in the current landscape. A clear example of this new reality is last room availability which is proving less valuable than before as hotels experience historically low occupancies.
2. Focus on what matters to travelers — Consider factors that matter to travelers as they return to business travel like location, health and safety, and traveler ratings. Building stronger relationships with these hotels and shifting a maximum number of room nights to them will provide corporate clients with the leverage to negotiate truly competitive rates.
3. Sometimes less is more - Before the pandemic, many procurement departments would focus on amassing huge numbers of corporate negotiated rates and chainwide deals. More was always better because, by showing the CFO potential savings across a wide number of properties, procurement teams believed they could highlight the substantial financial benefit their efforts could deliver. One of our clients in its top market had 12 preferred hotels. Another 300 were part of chainwide deals, and these had over 50 percent market share, possibly diluting from the client’s future negotiating power with the 12 primary preferred properties. The traveler, particularly the novice, may not see the distinction, but it is critical for long-term savings. Deals can look great on paper, but corporate buyers need to pay attention to actual outcomes. Some costs are easily avoided, and additional savings may be easily extracted.
Blog author: Derek Sharp, SVP & Chief Operating Officer, RoomIt, CWT