It’s never too early to start thinking about your hotel sourcing strategy.
1. Look beyond room nights and spend
Given today’s market conditions, it is time to look at the criteria you use to select which hotels to invite into your RFP process. It’s important to go beyond looking at historical market and property volumes, property tier level, location, and other traditional information. It’s time to expand the list and build a hotel program that works for your company and travelers.
It’s important to look at rate availability performance in the current year, and whether the average booked rate (ABR) is performing well versus your average negotiated rate (ANR) and the best available rate (BAR). How well are your properties working together, do they make sense and are travelers currently satisfied? Traveler sentiment should be part of your planning; unhappy travelers will influence your ability to maintain program adoption and compliance.
2. Implement a reduce and diversify strategy
While it’s often tempting to include a wide range of hotels in your program, Advito’s reduce and diversify strategy is designed to help you focus your RFP efforts on the top 10% of properties used by your travelers, which accounts for approximately 65% of your total hotel spend. Within this top 10%, negotiate static rates and competitive dynamic discounts that exceed chain discounts. By focusing your efforts on sending RFPs to only the top 10% of properties used by your travelers, you’ll focus your RFP efforts where it really matters and free up time to implement more effective strategies across your hotel spend portfolio.
The reduce and diversify method helps keep costs in check in those second and third tier markets and recommends using market rate targets which provide travelers with guidance on the appropriate rate to book based on a combination of BAR and ABR trends, as well as promoting the use of discounted rates negotiated by your TMC, like BCD Great Rates, and business appropriate hotel aggregator content.
3. Monitor rates and ensure travelers are engaged
Using a “set it and forget it” approach isn’t going to keep your program competitive throughout the year. Ensure your rates are competitive, and measure consistent availability of these rates as these bring value to your program and create a positive experience for your travelers. Once your rates are in good standing, look at your travelers’ buying behavior and start implementing strategies that influence purchasing behavior to align with your goals whether that’s lowering spend, adopting sustainable choices or focusing on DE&I. Engage with your travelers on what’s most important to them and their experience.
Advito’s approach is to continuously manage and source your program throughout the year by challenging underperformers and realizing new opportunities to capture more savings in the here and now, not 12 months later when it’s too late. Dynamic Performance Management (DPM) also sets you up for success when the next annual RFP approaches by knowing which properties to focus on, reducing the effort needed and number of hotels to reach out to.
4. Leverage data
Data analysis for traditional hotel programs has historically involved an annual comparison of the booked rate vs. negotiated rate based on six months of data. The new, modern approach takes into account additional metrics and is evaluated more frequently. Evaluate your data regularly – we recommend monthly – to compare your discounts to standard/best available rates and evaluate the availability of your rates, while still considering booked vs. negotiated rates. Use this data throughout the year to help make adjustments with hotels as you go and track actual savings throughout the year. Additionally, leveraging Advito’s Quarterly Travel Price Index can help you align your hotel strategy with more accurate market projections.
For more information or help getting started, e-mail: [email protected].
