The hotel marketplace is in a buoyant state as we head into 2015. Analysts say next year will be a sellers’ market. Obtaining rate reductions from hotel partners is probably out of the question. Sales and account managers across the sector have aggressive growth targets.
However, all is not lost. With every challenge comes an opportunity. This year, for buyers, will be about finding added value from hotels. They might not drop nightly rates, but there is room to discuss breakfast, wifi, laundry and other expenses being built into negotiated rates.
These are areas that travel managers often find difficult to control. It is, therefore, time to get round the table with your hotel contact and find ways to close gaps and tighten spend leakage.
Jon Bolger, group travel category manager, Capita
To control hotel spend, the first questions to ask is: what type of policy do we have? Is it mandated, for example? Do travellers choose from a list of hotels – pre-determined by availability, price and proximity to location – or is it traveller-led? Does the individual choose the hotel, within certain parameters such as a rate cap? And what systems do employees use to book hotels? Once you know these answers, you’ll know what you can and can’t control.
A mandated programme allows you to leverage volume and spend, establish minimum criteria for all hotels, and often reduce costs while meeting duty-of-care obligations. What does the spend data tell you? Are employees booking and paying for hotels direct and claiming costs back via expenses?
To reduce or remove leakage, senior stakeholder engagement is critical. They need to understand why the leakage is hurting the business, then support and enforce the policy where needed. Suppliers need to be clear on what the policy is. Regular reviews will ensure key hotels are engaged and supporting your objectives. A mandated policy with a clear preferred supplier list is key.
Be seen as leaders, not policy managers – understand market dynamics, such as supply and demand in key locations. Developing solutions that manage costs, and meet operational and employee needs as your business grows, will elevate how procurement is viewed.
Look at other spend opportunities with hotel suppliers – such as client-specific menus, so employees eat at the hotel. What meetings and events opportunities exist that could benefit both you and your supplier? To control your spend you need to know your spend.
PAULINE HOUSTON, global director – supplier management, Carlson Wagonlit Travel
Always remember the end user - the traveller. Put yourself in their shoes and think about what is important. Then try and weave that into your objectives for cost, safety, consolidation, quality and control. By engaging key stakeholders, creating ambassadors and asking for constructive feedback from the travelling community, you will get buy-in to a hotel programme in its infancy and help smooth the path forward.
Analyse the data you already have. The more you collect the better. Consolidating agency, supplier, consultant and expense data can give you a good starting point to build a strategy to mitigate leakage.
Strong and clear communication to bookers and the travelling community is key. Tailoring messages and getting them out in a variety of ways ensures greater participation and feedback. Try stakeholder engagement webinars, face-to-face workshops or ‘fireside chats’. Concise and clearly written documentation should also be communicated and made available for future reference when discussing policies or changes in practice.
Controlling ancillaries is becoming easier with improvements in technology, adherence to programmes and support from suppliers. Mobile apps are increasingly supporting programme compliance, as well as speed and ease of booking. They can be as easily monitored and controlled as desktop bookings.
There are many reasons for out-of-policy booking, including historical legacies, and lack of monitoring or consequences for going off-programme. Some suppliers inadvertently encourage maverick behaviour, with loyalty schemes and other incentives.
Often benchmarking departmental behaviour (nobody wants to be at the bottom of a poor adoption league table) can improve the overall hotel programme stickiness, and even just knowing that spend and bookings are being monitored is a good way to get compliance.
JANI KASKINEN , CEO, Hotelzon
Having a solid travel policy is crucial when it comes to savings, and systems to enforce and manage it are necessary. Communicating the importance of policy to travellers is also key.
Nowadays hotel expenses are often the biggest cost on a trip. Without a proper policy, the company is unable to monitor spend – and you can’t manage what you can’t measure. Employees can spend hours online browsing through different websites and booking channels looking for the best available rate, and if you calculate the time some employees spend on this it equates to a lot of time and money – it is not in the company’s best interests. Allowing these methods of booking means savings do not exist, or are impossible to verify. Companies should concentrate on one booking channel so they can be certain about obtaining the best deal.
Booking online can save money on service fees, which adds up to a lot over a year. Having an extensive hotel selection as well as the ability to add any hotel to the programme at short notice creates value for both the traveller and travel manager. It also reduces out-of-policy behaviour.