The right hotel sourcing strategy helps you manage price increases and adapt to changes in booking behavior.
You likely have a portfolio of hotels with whom you enjoy preferred rates and to whom you point your Travelers. That said, if you haven’t updated your hotel sourcing strategy in the past 2 years, you’re likely missing out on opportunities to reduce your spend while better aligning with your Travelers’ preferences.
This time of year is the perfect time to sharpen your global hotel sourcing strategy. Here’s a look at 5 ideas to get you started.
1. Lean on Data
Thanks to modern travel technologies, Travel Managers have at their fingertips more data than ever before. Use that data to inform your hotel sourcing strategy.
For example, evaluate your negotiated rates versus the rates actually booked by your Travelers on a regular basis. Monthly check-ins are a good place to start. If your negotiated rates are often available but the booking rate of your Travelers is low, that’s a good sign that the negotiated rate is not as competitive as you might have hoped.
Data can be applied across almost any decision you make regarding hotel sourcing. Don’t fly blind. Avoid making decisions based on assumptions or instinct. Consult the data to ensure you’re maximizing your hotel program.
2. Use Your Current Spend Amount
The easiest thing to do is rollover existing rates to the next year. But, given how dramatically the business travel landscape has changed in the past 2 years, it’s important that you reexamine your negotiated rates based on your spend amount in the current year.
If you’re rolling over rates that are based on 2020 or 2021 spend data, you’re not giving hotels a realistic view into your travel spend. Without a realistic view of your annual spend, they may not make available their best rates.
You’ll also need to choose between static and dynamic contracts. Static contracts are based on the anticipated best available rates (BAR), which means that hotels know in advance what the rate will be so they can budget their average daily rates (ADR). With dynamic contracts, rates increase or decrease based on volume, which means that rates are less predictable. Many companies are shifting to longer-term static contracts, where the predictability outweighs any drawbacks.
3. Shrink Your Portfolio
Negotiate rates with fewer hotels; not more. This is another area where data can be a Travel Manager’s friend.
Look at the hotels and chains most often used by your Travelers in the past 2 years. You can also supplement this data by surveying your Travelers and asking about their preferences. Identify the most popular 10–20% of hotels and start there with your RFP process.
Shrink your portfolio, but don’t forget to diversify. You’ll need to include a range of different property types so that your Travelers always have an attractive option when booking under different circumstances.
4. Articulate Your Company’s Value
On the RFP process: Make sure to articulate the value that your company’s Travelers can bring to a hotel or chain. How often do your team members travel? Why do they travel? Is your company growing? If so, how will that influence travel in the future?
Your objective with articulating value is twofold:
- Capture the hotel or chain’s attention.
- Demonstrate that you deserve the best rates they can offer.
Hotels are working on RFPs all the time, especially during certain times of year. Make yours stand out from the crowd by painting a picture of why that hotel would want your Travelers staying with them. Companies with limited resources should focus on loyalty and letting the hotel know that it will be the organization’s go-to brand. Companies with limited resources may travel less, but a focus on loyalty can help them compete rate-wise with larger businesses.
5. Track Your Travelers’ Bookings
Things change during the course of the year. Stay on top of these changes by tracking your Travelers’ bookings at both preferred properties with negotiated rates and other properties without.
Again, focus on how often your Travelers are booking under negotiated rates (when available) versus how often they are booking alternative rates. The data will alert you to changes in the landscape. Then consult your Travelers to learn more about their behavior. Without regular check-ins, you could lose touch with the current status of your travel program.
Expertise on Negotiating Rates
When you’re trying to make the most of your hotel sourcing strategy, get support from a third-party with deep experience in negotiating with vendors. At JTB Business Travel, we provide a series of cost saving programs, including assistance with negotiating rates with your preferred hotels.
Get in touch to learn more about how we can support your hotel sourcing strategy.