Corporate rate savings eroded amid pandemic price plunge

Corporate hotel booking volumes in late January were at 18 per cent of last year’s levels for the same period, but that number is trending up, according to a new quarterly report from hotel reshopping platform Tripbam.

The metrics included in the report are from the company's new dashboard, made available to clients in January, which shows rate and other trends from its aggregated hotel bookings.

The report used data taken on 27 January for the previous 30 days and compared it to the same period in 2020. Tripbam found that, globally, the length of stay had increased by a little more than a day to 3.6 days globally, although in Europe it remains shorter, rising from 2.36 to 2.98 days.

Meanwhile, the average number of days stays are booked in advance declined from 14 to nine globally and in Europe dropped from 16 to 13.

After reaching its peak in March and April 2020, the overall cancellation rate is back down to about 10 per cent.

Rates also dropped significantly. Globally, the average public rate fell 41 per cent year on year from $205 to $120, and across Europe it slumped from $224 to $166.

Corporate booked rates, meanwhile, moved from $175 to $116 globally (and from $182 to $146 in Europe), showing the value of corporate programmes was significantly eroded. The figures mean average per-room savings globally (corporate versus public rates) went from $30 to $4 (or from 15 per cent to 3 per cent). The impact was felt less in Europe, where the difference moved from $42 to $20.

This points to a shift in discounts and is likely to be due to the rollover of high static rates, travellers staying at hotels without a discount, a drop in last-room-available rates, and a shift to lower tiers with lower discount levels.

"To get [the savings percentage] back, you have to work out more property-level discounts and go dynamic, be creative and actually put in a bit more work to get it back to that 15 per cent to 20 per cent level," Tripbam founder and CEO Steve Reynolds said. "You can't just roll over and get a pass and let it go."

Findings also showed that the average star rating across all bookings has decreased by nearly half a star globally, indicating that the business travel taking place – usually essential travel – is occurring at lower-tier hotels compared with one year ago. In Europe, however, the average star rating fell only 0.1 per cent.

On a global level, another interesting finding was that Hilton Hotels & Resorts-branded properties had gained 43 per cent in corporate market share compared with the same period last year, while Marriott International-branded hotels decreased 22 per cent.

"The fact that Hilton and Marriott are closer in overall market share than pre-Covid was surprising," Reynolds said. "Marriott had this huge lead. Now they are more equal because of the increase in essential travel and the type of hotels that are booked."

The picture was different in Europe, however, where independent hotels and Marriott retained the greatest share of the market, but Accor moved above Hilton into third. InterContinental Hotels Group (IHG) remained fifth while Hyatt moved above Radisson into sixth.

The analysis showed Marriott, Radisson and Hyatt as the most affected in terms of the greatest year-over-year reductions in rates, while Hilton, IHG and Accor were less affected.

Reynolds added that booking volumes were on an upward trajectory through October, then fell back as expected during the holidays. But since then, they have started picking up again. "It'll be interesting to see if the trend continues. It all depends on the vaccine and how quickly people get back on airplanes," he said. "Maybe the second quarter could be a great quarter for us. If we can get back [to the October numbers], we are on the road to recovery. Then the question is, what does that path look like, and how steep will it be?"

Reynolds said Tripbam developed the new dashboard because it was getting calls from consulting firms and research companies asking for insight, by region, country, brand and chain. "Rather than do analysis one-off for each call, we created the dashboard," Reynolds said. "As we built it, we saw more insights into the data that we thought every customer would find interesting."

He added, "Subscribers are using it to help determine strategy. Things are changing on almost a day-by-day basis. It's important to stay on top of it while negotiating deals and figuring out your strategy for static versus dynamic [rates]."