Today’s palette of properties and products for international hotel programs is broader than ever
When it comes to designing a hotel program that includes hotels outside the US, the best policy may be to revisit the classic adage: “Think global, act local.” And that usually means thinking beyond the usual channels to include working with independent properties as well as going outside the standard managed programs. It also means getting as local as possible through partnerships or even personal contact.
Travel management companies and global corporations have thought that whatever was in the GDS was worthy of sourcing, but everything else was out of sight, out of mind, according to Suzanne Neufang, vice president-Americas for HRS. However, as much as 50 percent of bookings are made outside corporate managed programs. And with a lot of international properties non-GDS, Neufang says that is an issue, as overseas hotel inventory is 75-80 percent independent while the great majority of hotel programs are with major brands.
Independence Movement
That independent factor is key when scanning the international hotel landscape. With non-branded hotels still dominating in most markets outside the US, and with the resurgence of independents in recent years, travel managers and their partners need to think about how they can best develop relationships with all these hotels – offering not only attractive alternatives to travelers but leverage in negotiating with major brands as they also continue to make inroads internationally.
“We’re not anti-chain,” says Neufang. “We are a real believer in having a full menu and showing all the four-star independents that might be great properties just a block away from the branded property.” Neufang says that the business traveler is much more discerning these days and many seek out those independent properties, often consulting colleagues who work in a given location.
Margaret Bowler, director, global hotel relations for HRG Worldwide, says, “While North American traveler managers have traditionally worked through GDS we have always worked with independent hotels and have systems that enable us to incorporate them into programs. Whether a company has enough volume to negotiate its own rates or work through our programs, we can partner with them to insure they are using the right properties for their needs.”
Over the past several years, there has been a significant increase of hotels either opening or reflagging as independent properties, says Kimberly Wilson, vice president, global sales – North America for Preferred Hotels and Resorts, whose members are independents. This paradigm shift, she says, “speaks to the consumers’ strong interest to select the best accommodation type for their business travel needs. Knowing this, global travel managers are constantly reviewing their hotel portfolio options for a variety of lodging properties to include in their annual hotel program.”
In some markets, says Wilson, independent hotels are the best-suited option for duty of care, negotiable rates or accessibility. She adds that independent hotels that are part of Preferred “compete more heavily” against chain properties to insure they are offering the most competitive bid rate and amenity offering.
There is no question there is great demand for independent hotels – with all trends pointing to travelers, including business travelers, seeking the kind of unique experience they promise. Says Neufang, “In many cities, travel managers tend to choose the same hotels year after year because it’s a challenging enough project. Fortunately, they don’t have to do it alone when experts can give them interesting alternatives.”
Ideally, she explains, a travel manager would be able to work with someone – like a sourcing company or TMC – that has access to all that content and most importantly relationships with all those hotels. If not, she says, “then travelers book those hotels anyway and all that data is lost.”
Playing the Third-Party Card Because they play such a potentially valuable role, TMCs and sourcing companies have not sat back while business travel gets ever more global. They have established footholds in many markets and claim to have the kind of local clout that can really pay off – taking the heat off travel managers.
“The real question is, do companies really need to negotiate with these independent hotels?” says Wes Bergstrom, vice president, global supplier relations for American Express Global Business Travel. “We believe no,” he concludes.
Bergstrom says TMCs are working to create greater access to hotel content, rates and amenities in an integrated environment. With some hotels moving more toward dynamic pricing, he says “we have seen many cases where publicly available rates or third-party rates are better than corporate negotiated rates. So it should follow that more options for the client and traveler should drive traveler satisfaction and program savings.”
With so many properties opening all over the world, says Bergstrom, it’s almost impossible to negotiate with all new hotels directly. He says American Express GBT and other TMCs are integrating non-GDS hotel content from multiple sources “to make sure that we have the relevant hotel rates, amenities and availability for our clients and travelers.”
In fact, should it always be the top priority for corporations to use hotels with which rates have been negotiated? Not necessarily, says Scott Brennan, president of RoomIt by CWT. “Travel managers need to consider whether securing company negotiated rates at all or most properties is really the right objective and if the cost and effort to achieve 100 percent coverage is truly beneficial.”
An efficient global hotel program, Brennan notes, is one that achieves the right mix of client negotiated rates in specific hotels or if volumes permit at the chain level – in combination with an agency’s own content, “provided that it is competitive, easily bookable and supported by agents for a good traveler experience.”
Brennan explains a primary reason why CWT launched RoomIt, its hotel sourcing division, was to give travel managers and travelers access to the best rates available whether at hotel chains or independent hotels. With access to content in over 70,000 cities, says Brennan, “travel managers no longer need to negotiate with independent hotels or at the property-level. We take care of that for them.”
Taking It Personally – and Locally With more corporations operating globally, Neufang says, “it puts a premium on travel buyers to bring value. As the new customer in town they have a unique moment to show the value they have already brought to other markets. It’s important for them to have good knowledge of their own travel patterns, and have those connections on the ground.”
Some observers think direct contact locally can pay off, even if a company doesn’t have huge volume to offer. Bjorn Hanson, clinical professor at New York University, who has long researched corporate rates, says, “When it comes to an organization with a relatively small volume, it might even be worth it for a representative of a company’s travel or treasury department going on a trip and meeting with hotels and finding out the best ones based on location and service. They can negotiate an agreement right in the general manager’s office. If volume seems too low, go for a two or three-year agreement with the first year based on projections and the later years based on real volume.”
It’s not always necessary to go through a complex RFP process if companies are buying a relatively low volume of rooms, according to Hanson. In many of these markets, he maintains, an independent may not always be looking to deal in thousands of rooms. “The company can say, ‘We’re not IBM or Google but if you guarantee a rate we will guarantee 100 percent of our room nights.’” Hanson says. “Or there are me-too agreements. Organizations with small volume can build a community of buyers.”
Hanson sees a growing, if not huge, trend of companies going back to old-style policies and simply providing a per diem and leaving lodging choices to the traveler. “That’s emerging because younger travelers don’t like arbitrary rules and want to stay where they want to stay,” he says.
But sometimes bigger calls for bigger – if only because some markets are difficult to work in for those with little experience or presence. For organizations with lots of room nights, it might be necessary to go with a larger entity that is already in the region. Neufang points out that HRS has 300 people on the ground in China. “There is no way to get a Chinese hotel to respond to an RFP,” she says. “You need expertise to do it and you don’t get that from GDS, which operates in English only.”
The global hotel market is very dynamic, says Bowler, and there are new markets and new hotels appearing rapidly. Unlike the airline industry, says Bowler, “the hospitality industry is very fragmented and we can help managers put together a relevant program that will satisfy travelers but also drive cost savings and most importantly generate data should anything go wrong.”
While corporate negotiated rates provide savings, Brennan says individual companies don’t have to negotiate their own rates in order to realize savings, “especially in challenging markets such as South America, India and China.” Instead, RoomIt is recruiting a hotel supply staff that will be present in emerging markets, including China, to negotiate on behalf of clients at scale.
“Our solutions,” says Brennan, “cater to local specific requirements with staff on the ground who understand the needs of that market.”
Phyllis Nakano, director of vendor relations for Balboa Travel, Inc., says she believes it is critical for travel managers to foster relationships with their local offices and make them part of the selection process. “Their local knowledge and understanding of local nuances will help when negotiating with an independent hotel,” she says.
The key, says Nakano, is to ensure that the local associate understands what the goals are so the focus remains on the company’s primary hotel program and travel management goals. “It will provide you the elements to meet the company’s objectives such as price, value, safety or other critical components.”
Junko Saito, deputy director of marketing and public relations for Keio Plaza, a major Tokyo hotel, says there are distinct advantages in dealing with an independent hotel on a local basis. “We are a very well-known domestic brand that is a household name in Japan because of our many other interests,” she explains. “As a result, we can make many local connections for business travelers.”
Will Big Brand Collections Help? With the explosive growth of collections like Marriott’s Autograph and Hilton’s Curio, travel managers gain another option – finding interesting independent hotels with the validation of a major brand. According to Mark Nogal, global head of Curio Collection by Hilton and Tapestry Collection by Hilton, “Most of our growth at Curio right now is international. We do vet these properties and customers get loyalty program points. However, they are unique facilities for the traveler and serve as an alternative. We will certainly be leveraging our Hilton business travel sales force towards Curio.”
In the rise of the collections, Neufang sees a barometer of the increased interest in the unique qualities of independent hotels. “Give credit to the big chains to see what has been happening,” she says. “There are high-end boutiques they don’t want to exclude from the options made available to their travelers.”
Preferred has over 30 global office locations in key markets, Wilson says, with salespeople responsible for learning global business trends and reviewing data analytics to understand market conditions for account retention or opportunity improvements. “This integral practice helps the global sales team discern the booking patterns of a particular corporate account, which may warrant negotiation discussions with the travel manager for better cost savings in that company’s hotel program,” she says, adding, “This relationship dissipates barriers and helps ease negotiations in multi-cultural or emerging markets.”
Global Outlook Despite some geopolitical trends, globalization is here to stay and it’s important to look ahead to see what that means. Not surprisingly, analysts see technology playing an ever-larger role. For example, Preferred recently launched the iPrefer App, which allows loyalty customers the opportunity to review hotels and book reservations. The tool has generated an uptick in international reservations, Wilson says. “As more people use the iPrefer App,” she points out, “it will become easier to search for and ultimately work with international hotels.”
Nakano says that electronic RFP tools are reshaping the marketplace as international hotels become familiar with them, making the process easier for all the parties involved.
Technology may dramatically shift the distribution landscape, says Bowler. She notes that HRG was the first major TMC to sign a deal with an airline that provides bookings outside the GDS through New Distribution Capability. Furthermore, she adds, it would not be out of the way to speculate hotels will follow suit in using new forms of distribution.
Bergstrom says given the advance of technology both within the corporate travel industry and outside, the ability to distribute hotel content is becoming easier and will open opportunities for independent hotels moving forward.
Artificial intelligence, chatbots, voice recognition and more interactive tech solutions will all have an impact on how hotels are showcased and consumed. Bergstrom says the integration of these technologies within TMCs and the suppliers they work with “are providing international hotels with the exposure to an even wider customer base that will foster continued growth and success.”