BTN Europe presents an overview of business travel and MICE predictions for this year
Virtual Event - 1 October 2020
ExCeL London - 22-23 June 2021
A better hotel deal for the corporate?
RFPs from thousands companies are currently winging their way to hotel groups around the world. The last time these documents went out, it was a strong seller's market with the hotels able to impose their terms.
But has much changed in the last 12 months? A little but enough for hotel experts to believe that corporates might just get a better deal this time round.
The market is so fluid thanks both to the economic slowdown and the vulnerability of the crucial banking sector that it could have changed radically by the time the serious talks begin.
Jason Harris, senior director for hotel solutions for BCD Travel, said: "Things are looking quite positive for hoteliers. They are looking for some increases in rates for next year to cover their costs while the corporate are looking for a decrease for next year."
But he stressed it was "still early days."
Mr Harris said that corporates were likely to be asking for added value from their deals with free wifi the number one demand, followed by breakfast and parking.
One area where hotels might be vulnerable, he said, was in their business mix.
"This is an area where some hotels will struggle. Many have not looked at their business mix in the last few years. They have been charging higher rates for the banking and financial world.
"Some which have done this are now going to be more susceptible to negotiators than others," he said.
Corporates were also putting more questions about hotel security and green issues in their RFPs which should help gain leverage in the talks. But they still faced an uphill battle.
"It's definitely moving from a strong seller's market towards a buyer's market. It is still a seller's market but it is changing on a weekly basis," he said.
Mr Harris said that Europe was "still bullish." He added: "We have seen some negatives but it is still going strong. London is as strong as it has ever been. But again things could change radically."
Where the market was softening from the hoteliers' view was in the secondary cities and the suburban or out of town hotels, rather than in cities like New York or London.
There was also a move away from five-star towards four-star properties and more interest in three-star and budget hotels.
"The RFPs are seeking a much wider solicitation, they are going out to a wider choice," Mr Harris said.
Margaret Bowler, HRG's director global hotel relations, first indicated that the balance between hotel and corporate might shift slightly in her six month hotel survey published in July.
The fall of major banking house on both sides of the Atlantic and the nervousness surrounding others, has confirmed her view that things could be better for the corporates.
She cites as a striking example the availability of hotels in the Canary Wharf area of London compared with the rest of the city which is still doing very good business.
But Ms Bowler said it was a mixed picture, dependent on geography. Some regions, where demand outstripped supply, were enjoying double digit growth. In other areas, hotels are looking for business which just a year ago they had turned away believing they could get higher rates.
”Because the market was so strong coming out of 2007, there was business hotels did not want last year. We saw hotels walking away where they deemed they could get a higher rate.
"But hotels are now looking closely at demand. There is also more availability closer to the time of arrival so hotels are re-looking at their strategies.
"This is not only for pricing for next year but also for more business for the coming year," she said.
Ms Bowler said this would help companies which were able to shift their business. "It's still a balancing act between availability and price," she said.
Like Mr Harris, Ms Bowler said there was evidence of companies moving from five-star to four-star properties as well as more availability.
This gave the corporates more leeway which some were taking advantage of by talking about Last Room Availability ” which had moved off the agenda in the last couple of years ” as well as discounts and a lower Best Available Rate.
But dynamic pricing was also coming into play although she added that "it is difficult getting corporates to see what the benefits for them are."