Hotel sourcing strategies are ripe for change. A new white paper from the Association of Corporate Travel Executives, underwritten by BCD Travel, shows corporate travel managers are increasingly frustrated with the manual, time-intensive process of hotel requests for proposals.
A full 69% of corporate travel managers surveyed as part of ACTE’s research aren’t happy with the performance of their traditional hotel sourcing methods, or they want to make a change.
Travel managers are rethinking RFPs and slowly turning to newer, dynamic systems and strategies for hotel program management.
The findings come as technology streamlines almost every other aspect of travel. But for many corporate travel managers, hotel sourcing is stuck in the pre-digital era. Yet, despite their frustrations, most corporate travel programs are following the same old patterns in contracting hotel nights for 2018, according to the paper, New Approaches to Hotel Sourcing.
New Approaches puts data behind the hotel-sourcing paradox easily recognized by travel managers across the globe:
- 56% of travel managers surveyed plan to source more than half of their 2018 room nights via an RFP.
- 29% will use RFPs to source at least three-quarters of their rooms.
- Just 38% believe the traditional RFP-based hotel sourcing method gives their program the best return on investment.
- 55% of travel managers expect annual RFP setup to consume more than 50 hours of their time, while 40% believe maintenance will require more than 50 hours.
But the research also points to solutions:
- 42% of travel managers surveyed are using some degree of dynamic hotel sourcing, with 20% saying they are using the dynamic model to source at least half of their room nights.
- 70% of managers using a dynamic approach secured more than half their rooms at their negotiated rate in the last sourcing cycle.
- Managers leveraging dynamic sourcing are a third less likely to say they lack data on their negotiated-rate attachment levels.
- Asked to focus specifically on the advantages of dynamic models, travel managers homed in on strategic improvements: 44% say it offers greater flexibility; 42% point to improved traveler satisfaction; and 33% say dynamic sourcing helps them increase compliance.
“Hotel sourcing is an enormous time-sink,” said Charuta Fadnis, senior director of Research & Intelligence for BCD Travel. “Taking advantage of dynamic sourcing methods can vastly reduce the time and energy spent on negotiating hotel contracts, lead to ongoing program improvements and enhance the traveler experience.”
Greeley Koch, executive director of ACTE, noted “institutional inertia” is a problem. “For many years, RFP-based hotel sourcing processes have been the norm with no viable alternatives. But travel managers now have access to newer, more cost-effective tools—and need to move away from the ‘this is how we’ve always done it’ mind-set.
“Making any major programmatic change requires travel managers to take some risks,” Koch said. “The dynamic sourcing model is more complex than the traditional model, and for many organizations, it might work best alongside traditional RFP methods. The key to success will be trial and error, and not being afraid to step back, evaluate what didn’t work and continue to forge ahead.”
Fadnis said travel management companies and other suppliers have an important role to play in the move to dynamic hotel sourcing. “Education is the first hurdle travel managers must overcome,” she said. “They should rely on their partners to help them navigate the noise and understand not only the solutions available, but which are best suited to their managed travel programs.”