April 16, 2024

Peaks and troughs

Pauline Robin, Senior Director RoomIt Solutions, explains why she believes hotel programmes demand a ‘continuous sourcing’ approach in 2022

The hotel landscape has been through the mill over the last two years. Amidst promising glimmers of recovery nudging at the herald of 2021, new variants of the virus arrived and abruptly halted the upturn in the months immediately following the outbreaks. CWT data shows that whilst hotel bookings throughout 2021 were up from the previous year, Delta & Omicron curtailed 2021 booking growth by roughly 50%.

And hotel pricing has dipped in tandem. According to CWT’s 2022 Global Business Forecast, hotel prices dropped 8.3% in 2020, followed by an additional drop of 17.7% in 2021. Although hotel prices globally are expected to steadily rise in 2022 and 2023, volatility is inevitable with supply and demand fluctuations, along with inflation, higher labour and operating costs.

“Until the travel landscape becomes less volatile, the traditional method of hotel sourcing is somewhat defunct”

Add to that pent-up demand from leisure travellers, hotels looking to recoup their losses, and a data dearth caused bytwo consecutive years of little-to-no bookings, buyers are left with a lack of insights on which to hinge predictions for the year ahead. A one-and-done annual RFP process is less appealing to buyers than ever.

Until the travel landscape becomes less volatile, the traditional method of hotel sourcing is somewhat defunct. Where historically four-month hotel negotiation processes taking place every year were the norm, travel managers are looking for more flexible ways to manage their programmes and costs, whilst demand, volumes and budgets remain fluid.

The continuous monitoring of hotel programmes has become critical, as hotel experts have developed new ways of auditing supplier contracts. RoomIt, for instance, is continuously monitoring corporate negotiated rate availability and competitiveness at the point of purchase, allowing us to identify the strongest partnerships for our clients.

Our data lake is constantly adjusted to comprise new hotels, alternative properties, policy updates, and more. A smaller and more targeted selection of hotels in the programme saves time, maximises savings and facilitates adapting to rapidly changing circumstances and goals.

“The continuous monitoring of hotel programmes has become critical, as hotel experts have developed new ways of auditing supplier contracts”

Managing hotel programmes for some of the world’s leading global businesses, we’ve seen great efficiencies in customers concentrating their hotel programme portfolio – specifically incorporating fewer hotel properties into a programme. 

Adjusting hotel properties this way enables travel managers to effectively align hotel programmes to new post-pandemic business realities, such as the construction of a new plant or office closure and to analyse their preferred hotels from new perspectives like wellbeing, sustainability and diversity and inclusion.

A continuous pricing strategy also enables travel managers to best track and analyse booking trends on a recurring basis, readjusting their hotel portfolio throughout the year to achieve savings and programme stickiness.

Here are three tips to optimise your continuous sourcing strategy in 2022:

Put savings before price

Use your negotiated rates as a cap when public rates are high; and leverage your TMC’s dynamic rates when public rates are lower. This will allow you to protect your programme from higher rates when public rates increase, while taking advantage of times when rates are lower. Additionally, keep track of non-available negotiated rates. These will prompt travellers to book higher rates at the same hotel. Alternative properties could offer better deals.

Define your end-to-end strategy to deliver targeted results

Ensure all your stakeholders are crystal clear on your company’s priorities with regards to savings, traveller wellbeing and sustainability. Travel programmes, policy, display settings and rebooking rules must constantly align with your company’s expectations and priorities.

Strengthen your partnerships

Avoid diluting your volume with too many preferred properties or chain-wide deals at any given location. Better identify your most important partners and channel your volume towards those. In return, preferred hotels will give you the best rates and this will lead to better competitiveness and availability. Last but not least, choose suppliers that drive savings, offer coverage at key destinations and support your company goals.