Hotel program sourcing in 2021

Next to air travel, accommodation usually makes up the bulk of the business travel budget. But what has changed post-COVID? And what are the best practices for optimising your business hotel program now that it’s become more dynamic? Here we discuss what we feel is the best path for sourcing and driving intelligent buying decisions.

Sourcing Strategy

It is doubtful that the room nights consumed in 2019 will return in the next two years, so past accommodation data won’t mean much now. Instead, understanding existing needs and accurate forecasting will be the precursor to optimising the sourcing.

  • Establish current needs. Before you start to re-negotiate, you need to reassess your current program deliverables vs your current needs. With the decline in volumes, rates are volatile now, so room night data is vital, not spend. Determine what and how many properties you require in your preferred hotel program, then how many room nights you will need in each city and property. We recommend removing hotels from the program where necessary – this reduces the time you spend on sourcing, and you can always add on as your travel volumes increase.
  • Determine the optimal rate structure. Hotels constantly change their rates based on market conditions, occupancy levels, and purchase patterns. The secret to improvement is to embrace this and adopt a dynamic sourcing approach to build an efficient and flexible hotel program.
  • Adopt the rate type that works best for you. According to Advito, hotel rates declined by 30-40% from June 2019 to June 2020. Based on this, are your negotiated rates currently competitive? Do you have fixed room rates, a discount on the best available rate or a mixture of both in place? And how do these compare to what is available to the public? Also remember to that cancellation rules can be stringent, so include these in your negotiations.

With resources stretched in all industries, we recommend negotiating evergreen dynamic rate discounts for most of your program. This way, you will maximise savings and reduce the time spent on sourcing – you simply need to adjust when needed.  We suggest that fixed rates, or a mix of fixed and dynamic rates, work best for properties where you spend more than 1000 room nights per annum.

Supporting the program

  • Communicate the program to travellers. Ensure that travellers know which properties to book not only to drive savings but also to support your duty of care commitment. Direct your travellers to secure the most competitive offers.
  • Define parameters. If you utilise an Online Booking Tool, adjust the settings to only include preferred properties in the search results. Set the preference to price so that results appear in order of the best prices first.
  • Adopt a re-shopping tool. Hotels use algorithms to calculate prices in real-time to maximise revenue management (known as dynamic pricing). To get a lower room rate, consider implementing aa re-shopping tool. These tools scan rates on multiple sites and re-book a reservation when a lower rate is found. Speak to your program manager for more information.

Ultimately doing more of the same will not deliver the results you want to achieve. Accommodation establishments and businesses have suffered because of COVID-19. If you’re going to do business, approach the partnership as a collaboration. Size and source appropriately and maintain a hands-on approach to maximise the potential of the program.