Hotel Program Management Tools By Donna M. Airoldi / 3 May 2019 / Contact Reporter Share Hotel sourcing and management is one of the most complex processes travel buyers must wrap their heads around, especially for global programs using thousands of properties in dozens, if not hundreds, of countries. The sourcing aspect traditionally has been a grueling annual RFP process that lasts, on average, four to six months.Managing it can be just as challenging, even with technological assistance, but it's better than in the old days when fax, email, phone and spreadsheet resulted in printed directories—of preferred hotels, locations, negotiated rates, inclusive amenities and nearby attractions—for the use of admins, travel departments and frequent travelers.Today, all that information and more is gathered via technology and stored in online booking tools that offer travelers more flexibility and that capture data to provide managers insight into how their programs are actually being used. But there's room for improvement, both in how the RFP is carried out and in what reporting is available for managing programs once sourced. There are grumblings that the RFP process should be abandoned. Will more companies move toward a dynamic pricing model? Will blockchain introduce smart contracts? Third-party suppliers are stepping up their offerings to answer these questions and to make the sourcing process more transparent and easier. SourcingSourcing technology came on the scene at least two decades ago and has advanced significantly since then, though some buyers complain that providers haven't kept up with innovations. These products generally automate functions for soliciting hotels, receiving bids and negotiating.In addition, HRS and a few travel management companies and consultants have built their own hotel solutions divisions and offer market-modeling tools. For TMCs and third-party consultants, these tools often sit on top of a Cvent Lanyon or Lodging Logistics product but can capture more data to bring fuller reporting and analytical capabilities to clients.Each of the major hotel RFP tools are built around a Global Business Travel Association template designed to cut costs and standardize the RFP process. Buyers can negotiate established fixed rates, including amenities, at their top-volume hotels; chainwide rates, usually a percentage off the best available rate; and dynamic pricing for select hotels, which also is a percentage off the best available rate. Depending on the agreement, the dynamic discount could exceed the chainwide discount.Automating parts of the sourcing process saves time and money, and auditing to ensure hotels are offering the rates and amenities negotiated can ensure money savings. But not all tools provide the same services or have the same interfaces, so ask a few questions when looking for providers: How extensive is the solution's hotel reach, particularly if your travel program is global or reaches remote locations? In what languages is the content available? Can you send unlimited RFPs, or is there a cap? Is reporting included in the base price, or is it extra? Can the provider also source meetings and group travel? Does the provider include market intelligence for the hotels in the system, giving transparency on the mid, lowest and highest rates and amenities offered across all clients by property?Once the RFP process is completed, hotel partners load the negotiated rates into the global distribution system. Then, a corporate's online booking tool uses the corporate's GDS code to pull and display negotiated rates for the properties with which a corporate contracted. A corporate can limit the hotels displayed in its OBT to those properties. A travel manager also can add custom messaging for each property in the OBT, such as calling out the amenities or services included in the negotiated rate like free Wi-Fi or access to the property's executive lounge. The travel manager can add or remove preferred properties throughout the year.Many corporates start the RFP process between July and September, solicit hotels, get bids, go back and forth negotiating rates and amenities and finalize the agreements in November or December. The hotels then are responsible for loading the rates into the GDS the client uses. End of process, right? Not quite.Post-Sourcing ProblemsTravel buyers and third-parties alike complain that rate loading is still the purview of the hotels and instead would like technology that allows RFP providers, TMCs or consultants to populate the GDSs on behalf of their clients.That's because hotels are doing an imperfect job. For starters, they may not get around to loading a corporate's rates right away. Hotels tend to load rates for large companies in the beginning of the year, pushing smaller companies down the line as much as a few months. By March, then, smaller companies would have lost 25 percent of the opportunities for travelers to take advantage of their negotiated rates.Hotels also might load a corporate's rates incorrectly. RFP providers usually conduct rate audits, comparing rates from in-program searches to the contracted rates. According to buyers and RFP companies, 70 to 80 percent of rates are loaded incorrectly. Auditing software then emails a hotel to correct the rate in the GDS. By the third audit, 95 percent to 99 percent of rates are correct, but this could be months after the program started. This process also flags hotels that still aren't correct and that a travel buyer could consider removing from the program.Another issue is that negotiated rates at high occupancy properties rarely, if ever, are available. In this instance, the property might be sold out, but some say the rates go away when a property management system sells out of the negotiated rate or turns off the discounts whenever occupancy hits a certain level, even if a corporate is contracted for the last available room.Squatter rates also dilute the power of a corporation's hotel program. These occur when hotels find out a corporate's code in the GDS, load rates and thus appear in the corporate's booking tool; travelers don't know these properties actually aren't in the program. Some tools run audits to identify squatters, and corporates can have these hotels removed, ask their travelers not to book them, or, if the properties are capturing business with good rates, add them to the program.For all that work to get accurate displays in the OBT, 55 percent of travelers on average book outside preferred channels, whether booking direct with a hotel company to earn loyalty points or booking a better deal elsewhere.Rate Management ToolsThe HRS Rate Protector suite includes a rate-filtering service that can keep incorrect rates from reaching the traveler in the OBT, even if the traveler's company does not use the HRS booking tool. It can improve compliance, as well as create savings.Some buyers say it's imperative to invest in reshopping tools like Tripbam and Yapta, especially for large programs. These tools continuously look for better rates on rooms booked, and then either automatically rebook or alert the traveler, travel manager or TMC, depending on how the program is set up. In the latter case, the person notified accepts or declines the discount. The travel manager decides whether the tool rebooks or the corporate's own channel, usually its TMC, handles the rebooking.The corporate's hotel program manager should determine the parameters around use of such tools. For instance, at least with Yapta, a buyer can't turn it on or off. So if a program manager didn't want a certain booking reshopped, say for an international trip arranged far in advance that could be canceled, the corporate would receive notifications but decline the rebooking until, say, a week before travel. The travel manager also can set thresholds for what savings prompt rebookings or notifications.HRS also reshops among GDS content, online travel agencies, its direct connects to hotels and among its own negotiated rates. If it finds a cheaper rate for the same room with the same amenities and restrictions, it rebooks automatically, unless the corporate requests that notifications occur first. Yapta reshops rooms only within the hotel booked. Tripbam can reshop for comparable rooms within the same hotel and within nearby hotels. HRS does not charge clients for this service. Other companies keep a portion of the savings, the percentage of which is negotiable. Sources told BTN they saved between 2 and 8 percent using reshopping tools. Even the lower range can add up to significant savings when applied to large programs.Increasingly, companies are using reshopping tools to move toward hybrid hotel programs, negotiating fixed rates for their largest-volume properties, which could number as few as 10 or 20. Then for other properties, they let the reshopping tool find the best rates, more of a dynamic pricing model. These tools' reporting also gives buyers average daily rate information, among other insights; if a property's actual ADR is lower than the negotiated ADR, the corporate can ask the hotel for an explanation. As a result of this increased transparency, some hotels, in anticipation of that question, proactively lower the negotiated rates for hotel programs that provide a lot of business.Not all buyers are convinced this is the way to go. Some noted that TMCs can reshop and rebook, potentially for a fee, through the agency mid-office but don't take much credit for it. Others pointed out that as hotels have expanded their cancellation windows from 48 hours to 72, corporates don't want to risk cancellation fees that reshopping could set off. Also, a rebooking that moves a traveler to another hotel doesn't take into consideration people traveling together, perhaps sharing a car, and employees meeting clients at the originally booked property.Experience Management ToolsTraveler satisfaction is now the first or second consideration, after cost, for many hotel programs. Experience management tools—which capture the traveler experience and, ideally, improve upon it—also can increase compliance and diminish leakage. Some also ensure travelers receive ancillaries that were already negotiated so they don't pay extra.Some corporate travel managers are incorporating Big Data service TrustYou in their RFPs. TrustYou collects sentiment data from across the internet, not specific to corporate programs, and creates a TrustScore on a scale of 1 to 100. Buyers set experience thresholds—80, for example—below which hotels do not make it into the corporates' programs. TrustYou also can alert travel managers when hotels fall below the threshold. The corporate can reach out to properties to understand the issues or remove them from the program.Some newer booking tools leverage hotel sentiment data to preference hotels in the booking path. In 2016, Deem acquired Olset, which scours the internet for hotel sentiment data. Deem crunches this data to determine the order in which to display hotel choices—after accounting for corporate preferred status. Lola, a booking tool targeted to small and midsize enterprises, has a recommendation engine that functions similarly. More corporate booking tools are integrating this type of technology. While it automates a "quality" metric into the program, however, there's no specific data output to drive hotel program decisions.Tripism offers similar recommendations, minus the Big Data approach. The platform relies on the client's employees to populate the platform with recommendations, including hotel experiences; it shares recommendations from within a traveler's company, as well as across the Tripism platform. Some corporates have built internal recommendation systems that resemble TripAdvisor. Data from these can inform RFP solicitations and help manage hotel partner performance.It can be difficult to track whether travelers are receiving and accessing the benefits travel buyers have negotiated on their behalf. Some companies are getting in front of the issue with mobile messaging to encourage certain behaviors. If a traveler's GPS is on, for example, the corporate could push a notification when he or she arrives at the hotel that the hotel rate includes Wi-Fi. In the morning, a traveler could receive a notification that only continental breakfast, not the al a carte menu, is included in the rate. Products like HRS Filter, can see if the rate offered included all the amenities that were negotiated with it, such as breakfast, Wi-Fi and parking. But there's no way to determine whether travelers take advantage of them. Capturing detailed hotel folio data continues to challenge the industry, so unless a travel manager audits expense reports versus negotiated amenities, there's no visibility. The traveler is unlikely to itemize the hotel expenses in the expense management system, anyway, so the whole process is a bridge too far. Hotel folio itemizations additionally raise privacy considerations.Smart hotel technology provider Conichi is looking to solve that issue, including the privacy piece, through a digital payment solution, an Uber-style payment process that matches corporate bookings to preferred corporate payment instruments, then automates the payment process. It removes the need for the traveler to present a card. Conichi notifies the hotel that a card has been charged, and the hotel passes the key to the customer. The traveler then uses the Conichi mobile tool to check out, splitting any in-room items consumed onto a personal card. The traveler can do this anywhere—in the hotel room, in a meeting room, in a taxi on the way to the airport. The credit card details are encrypted, and the hotel never sees them, which cuts down on fraud. The travel manager then can see the breakdown of the charges to the corporate card, while charges on the traveler's personal card appear as a single ancillary spend line item. Reach is limited to Conichi's "smart hotel" partners.Can Technology Just Make All This Easier?From the protracted RFP process to supplier performance management and contract utilization, hotel program management is complicated. Suppliers and buyers have talked for years about how to simplify it. In the meantime, multiple technologies have been grafted into the process to address challenges in a piecemeal fashion.Blockchain-based smart contracts may provide the beginnings of a broader solution. While no companies currently offer hotel smart contracts for corporate travel, Ansero and Blockskye expect to test them. Ansero is about to launch a forerunner, Smart Hotel Rate. Using a spreadsheet of a client's negotiated rates and amenities, as well as the company's hotel bookings provided by the GDS with permission from the corporate, Smart Hotel Rate algorithms will determine if the rate offered was correct. It factors in all rates available, from the negotiated rate and TMC's rate to the seasonal rate, as well as blackout dates, room type and so forth. Moving that functionality to the blockchain would automate rate calculations based on contract terms and could adjust those terms dynamically based on volume thresholds. For example, if a company commits to 500 room nights at a property at $199 a night, the contract could dictate that the rate will drop to $169 a night when the client hits, say, 600 room nights. The change would happen automatically.A smart contract cannot be altered unless agreed to by both parties, and changes take effect globally and immediately. The smart contract also could automate the payment piece and deliver hotel folio data.This environment likely would initiate changes to hotel policy and to how programs are managed, perhaps moving from a focus on rate to a focus on service level, as the rate would be automated. Booking displays might then be prioritized on properties where the program needs to reach volume commitments. That's done today but is inexact because data isn't delivered in real time.A blockchain-based smart contract environment doesn't solve every hotel program issue. It does, however, offer hope that much of the turmoil could be removed from the equation, freeing travel managers to focus on supplier performance and the traveler experience—or something other than the hotel program entirely. HRS chief product officer Martin Biermann, Lockheed Martin corporate travel manager and global hotel program manager Joe D'Abate, Yapta president and CEO James Filsinger, GoldSpring Consulting partners Neil Hammond and Will Tate, DHL T&E regional category manager Michelle Hunt, EY global supplier leader Tim Nichols, Ansero co-founder John Packel, HRS CEO Tobias Ragge, Tripbam founder and CEO Steve Reynolds, Cvent senior principal account manager of enterprise solutions Jean Squires, Mezi VP of strategy and partnerships for American Express Johnny Thorsen and Conichi co-founder and CEO Max Waldmann advised on this article.