On the whole, buyers should be prepared to kiss their
pre-Covid negotiated lodging rates
good-bye. Pricing recovery in the hotel industry has been on a roll since the
summer of 2021. Average daily rates are regularly surpassing those in 2019
across a number of markets—and not by small percentages. Central business
districts in the U.S. and Europe are lagging suburban markets, however, and
that may give buyers some leverage for rate negotiations in key hubs.
Inflation, however, will be an immoveable issue that may prevent buyers from
hitting the rates they want.
Most buyers will be challenged to produce solid hotel volume
data, which complicate room-night commitments. Sales teams may instead push for
market share, meaning that buyers would be required to commit a percentage of
their room nights in the market to that partner. In that environment,
strategies to influence travelers and get them to book in-program will be
essential. But so, too, will be auditing strategies that clearly show travelers
getting the right rate to justify the booking.
Rate-shopping strategies, now common among programs, will be
key to delivering those audits. They are also critical to achieving success
with dynamic rate agreements that have become a staple for hotel
programs—particularly for properties outside a company’s top routes. Most
travel management companies offer such capabilities now, as do dedicated
third-party suppliers.
Changing Travel Patterns Impact Hotel Programs, Policy
Remote work has blurred the line between business and
leisure travel, and increased demand for traditional “shoulder days” on
Thursday and Sunday. Travel buyers may see the hit on their budgets, but they
may also want to prepare travel policies to address the trend. For example,
should a company try to extend negotiated rates or dynamic discounts for
personal travel as a program perk? Or, how does duty of care fit into “blended”
business and personal travel?
Another change shaping up for 2023 is the
prevalence of longer trips, whether travelers need to see multiple clients on a
single trip, stay longer with a key partner or perhaps save on the carbon
emissions. Whatever the reason, longer trips translate into different needs.
Buyers report increased demand for both extended-stay properties and corporate
apartments, which may offer more homelike environments. As buyers consider
their programs for 2023, they may want to explore some new options.