A panel of industry experts seemed to disagree on the efficacy of negotiated hotel rates during the opening plenary session at the ACTE Global Summit in Amsterdam.
Leading the discussion entitled "Pulling back the covers: finding the best lodging strategy for your programme", Festive Road managing partner Paul Tilstone started by asking why the accommodation distribution landscape is so complicated. Michael Simon, senior director of distribution in Europe for Marriott International, pointed out that the global hotel industry is very fragmented but said there is an opportunity for the larger chains to lead a change in the current model because they have the capital to invest in such projects.
However, Laura Kusto, senior director of hotel solutions at BCD Travel, said it should be travel managers and their TMCs who take control of the conversations. “It’s not the job of the hotels to make the travel manager’s job easier. We’re in this situation today because in the corporate world we haven’t kept pace with technology. The content is the content; it’s not going to stop, and the hotels are making decisions based on what’s the most profitable. So when you’re designing your travel programme you need to think about the content in terms of data that you can analyse and use to educate travellers in a way that drives adoption.”
Tilstone then pointed out that companies like the ones the panellists work for would not exist if agreed rates were always offered, booked and consumed. Jason Long, SVP of global business development at HRS, said technology can actually help when it comes to ensuring negotiated rates are available and bookable. He added that “the fact the industry has to have rate audits is obscene. We know from research that 20 per cent of loaded rates are wrong and usually they are higher. Why should we even show false rates in an OBT [online booking tool]? Why are they bookable? I think it makes sense to filter out those incorrect rates.”
Peter Grover, MD, EMEA at Tripbam, added that bringing in content from multiple sources gives corporates the chance to shop around and find lower prices, to which Tilstone replied: “But if you’ve taken the time to negotiate a rate with the hotel then surely you should have access to them.”
On the contrary, Kusto said the problem lies with the fact that corporates are spending too much time negotiating rates. “Hotels are managing their revenue almost hourly, sometimes by the minute and as a result, rate availability has gone down. You should only be negotiating static rates if you’ve got a lot of leverage. Negotiating static rates for your entire programme is a waste of time; if you try to negotiate in your secondary and tertiary markets, are the rates going to be as competitive as they are for a company that is a primary spender in that market? No, they’re not. So don’t waste your time there, negotiate evergreen or dynamic rates instead. Take the ball back into your court and start controlling how your travellers spend.”
But Grover later disagreed with Kusto, saying his piece of advice for travel managers is to “negotiate strong discounts with 80 per cent of the properties you’re going to use to make sure you get maximum coverage, then make sure you’re getting that rate every time a traveller books.”