As part of this year’s 2021 Hotel Report, BTN surveyed 138
travel buyers as to the state and future of their hotel programs, and found a
desire to move past the pandemic, back to a world of negotiated contracts and
widely available amenities. But a return to normalcy isn’t that simple, and
persistent labor shortages have left hotels unable to fully return to a
pre-Covid era, and buyers still don’t have anywhere near a complete picture of
future demand. Still, as the recovery continues, both sides are finding ways to
work together to move forward.
2022 RFP Trends, Rate Strategies
Last year, some buyers opted to roll over their negotiated
2020 rates into 2021, given uncertainty about future volume and chain
representatives who were operating with fewer resources and doing more work.
For the current request-for-proposals season, “the situation appears to have
stabilized quite a bit further, and the chains have caught up with some of the
processes needed for dual-rate loading and flexibility,” said Goldspring
Consulting partner Neil Hammond. “There’s a little more beyond, ‘Here’s the rollover,
take it or leave it,’ ” he said, adding that he’s seeing more chainwide
agreements.
Survey results showed a little more than half of buyers
planned to roll over portions of their hotel program portfolios, but also
negotiate key partnerships. Slightly more than one in five buyers planned to
roll over their entire portfolios, while nearly one in four planned to conduct
a full RFP for the 2022 season.
Those results are consistent with what Areka Consulting
managing partner Louise Miller has seen. “Some customers are at 40 percent to
50 percent of normal levels and know where they are staying and going and can
feel comfortable negotiating,” she said. “Others are traveling 10 percent or
less [of previous volumes]. They are waiting to see where demand materializes
and can practice dynamic program management.”
Indeed, nearly 62 percent of buyers reported that they will
push more agreements to dynamic rates than in the previous cycle, with about 44
percent planning to use a negotiated corporate rate as a cap for those
properties. This increase in using dynamic rates surely would please the hotel
companies, many of which have been pushing for them for years.
About 22 percent of buyer respondents planned to concentrate
more on static rates and less on dynamic compared with the previous cycle. Just
15 percent were “all-in” on static rates, and about 1 percent were using
dynamic only.
Geography also may play a part in rate strategy. “2021 saw a
lot of contract rollovers,” said Accor SVP of sales and distribution Markus
Keller. “People were on furloughs on both the supply and demand sides. But
people are coming back to the table and want a discussion on what rates will
be. There is a lot less rollover. That is particularly true for North America.
Other regions, like Asia-Pacific, are more accepting of the rollover. It’s not
all in the same place when it comes to the recovery.”
Some sources noted that, depending on the company and
vertical, hotel programs are generally smaller than pre-pandemic. That could be
the case for S&P Global director of global travel and meetings Ann Dery’s
program. She is holding off on an RFP until after the company completes a
merger with IHS Markit, which should happen before the end of the year.
“My strategy is to have a more strategic program,” she said.
“We’ll expand our footprint globally, as IHS Markit has offices in more
countries than we do. We are switching hotel consultants and solutions to help
with hotel engagements this year. But I don’t think we’ll need 200 hotels, or
multiple hotels in top destinations. We will look at who our top 25 properties
are and most likely try to get the top 10 a hybrid rate, then the next tier
will be dynamic with a discount and cap.”
Dery said it’s about making the program fit to the purpose
and having a smaller footprint and less properties per destination. “I do think
the pandemic has really changed the landscape when it comes to hotel sourcing.
It may or may not come back in a few years,” she said. “With reshopping tools
and better tools to track how often we are getting preferred rates, it’s
changed the whole dynamic of hotel sourcing.”
Supplier and On-Site Challenges
Nearly 57 percent of buyer respondents identified the
responsiveness of sales and account management teams as the biggest supplier
challenge they faced. This no doubt is related to the many furloughs and
layoffs the hotel companies conducted during the height of the pandemic, and
the difficulties they have had in rehiring workers.
“Some of the chains did really well, others did not,” Dery
said. One company “had such a huge amount of people furloughed, and it took so
long to bring some staff back that my account has suffered from a lack of
attention. We now have a new account manager with [them], but we lost all
connection to the former relationships we had.”
Hotel companies told BTN they are working hard to bring
staff back. “It is getting better every day, every week, getting people back to
work,” said Marriott International SVP of global sales Tammy Routh. “We’re
getting to occupancies where we can bring people back and reopen the
restaurants, all the facilities.”
Hyatt Hotels Corp. is looking to “open doors to new types of
people,” said Hyatt VP of global sales for the Americas Gus Vonderheide. “We’re
looking outside of the normal hiring process to recruit talent in ways we have
not done in the past, and it’s working well.” He added that Hyatt also is
getting involved earlier with hospitality schools, and not just interviewing
candidates during their senior year. “We’re getting to know these students
earlier on and getting them into the family sooner,” he said.
Another concern among buyers was finding market rates lower
than their corporate rates, shared by 45 percent of respondents. “If you have
dynamic rates and you’re rolling over, this won’t affect you,” said global
travel manager Mira Rosenzweig, who is co-chair of the Global Business Travel
Association accommodations committee. “Where you have a static rate and don’t
have a dynamic component in addition, that is where you’re running into market
rates much less than what you had solidified in the contract.”
In a somewhat related concern, more than one in three buyers
also noted that supplier challenges included a lack of a partnership approach
to negotiations and the overall price/value relationship.
By far the biggest in-hotel challenges were the availability
of food and beverage options (75 percent) and adequate staffing levels on-site,
such as for the front desk and housekeeping (66 percent).
Housekeeping always is a key topic, and most hotel companies
plan at least partially to retain an on-demand option, even post-pandemic,
especially given the increase in the cost of labor.
“Where some of the challenges happened, there was a
disconnect from the information we received and what the experience was on
property,” said Travelsavers SVP of hotel programs Samantha Jones. She added
that some full-service properties couldn’t service guests when the restaurants
weren’t open. “Midscale and economy hotels did better because they always offer
free breakfast as a brand standard,” she said. For one full-service hotel
company that focuses on the corporate traveler, Jones said the experience was
inconsistent from hotel to hotel.
“Service is a hot topic, especially when you don’t know what
you are going to get,” Jones said. “We are working with hotels directly to say
what is open and what isn’t to help us to communicate to our travelers what to
expect before they arrive. It’s difficult when booking for people who have not
traveled for a long time. They are expecting the pre-Covid experience. You have
to set expectations with travelers. But some people don’t care. They expect
what they expect as a paying customer. It’s a tricky thing.”
Service and Amenity Expectations
Nearly 44 percent of buyers found challenges with the
availability of on-site amenities, such as the gym and pool. About 29 percent
were concerned about properties having adequate business amenities, such as a
business center and Wi-Fi.
When it comes to service and amenity prioritization, 35
percent of buyers said breakfast would be a higher priority for them in 2022
than in previous years. The good news is hotel companies are beginning to bring
back fuller breakfast options, including BWH Hotel Group, Marriott and IHG
Hotels & Resorts. “Breakfast has one of the biggest impacts on satisfaction
scores, and Covid-19-related restrictions made it difficult for our hotels to
meet traditional expectations,” said IHG SVP of global sales Derek DeCross in
an email. “We’re working closely with owners to create a range of safe,
high-quality solutions for guests that remain cost-effective for our hotels.”
A full one-third of respondents said Wi-Fi would be
prioritized more for them than previously going forward, while 21 percent noted
that parking would be more important. “Standard amenities are still being
negotiated,” Rosenzweig said, adding that Wi-Fi will always be important,
especially as some guests are working from their hotel room. “Parking is an
interesting one because rental car usage has increased for some companies that
don’t want to be using rideshare. Car service has increased as well.”
But the top item that buyers identified as having more
priority in 2022 than before would be cancellation policies, noted by
two-thirds of respondents. “We’re seeing more flexibility with cancellation
policies,” Rosenzweig said. “But I don’t know how long that cancellation
flexibility will last. Those will come out in the RFP. Two to three years ago,
the cancellation policy was more 48 hours. Buyers are pushing for the same day
or 24 hours.”
Goldspring’s Hammond agreed: “Buyers are still holding firm
on no erosion on the cancellation period.”
Alternative Accommodation Usage
Much ado has been made about how short-term rentals, or
apartment-style accommodations, have been a success story during the pandemic.
Some leisure travelers now prefer these options for similar reasons
extended-stay properties gained in popularity. But what about business travel?
About 56 percent of respondents indicated they would make no
change to the use of serviced apartments or short-term rentals in their
programs. More than 22 percent said they planned to decrease their usage. Just
over 11 percent intended to increase their use in hotel programs. Ten percent
were unsure.
Areka’s Miller, though, is seeing interest in those options
rise. “Especially Airbnb for Work, superhosts and ones that have protections,”
she said. “I’m definitely seeing more interest in those. The travelers usually
drive the choice. Until travelers get back on the road, it’s hard to say. But
buyers control only so much. Three to four years ago at a conference, buyers
were saying, ‘We don’t allow Airbnb, not at all.’ Within a year, there was lots
of usage of those because the travelers did it anyway. That will happen again.
It’s just going to matter what is most convenient for the user.”
Increased Tech Use
Mobile keys and contactless check-in and checkout already
were growing in popularity prior to the pandemic, but Covid-19 accelerated
their acceptance and availability. Accor this year even introduced its first
fully digital hotel room in the United Kingdom.
“That hotel uses a number of technologies, and one is the
Accor key, which is being deployed into different hotels for keyless entry into
guest rooms,” said Accor’s Keller. “They can get the key in their smartphone
and head directly to their room.”
Nearly all of Marriott’s hotels globally offer mobile
check-in through its Bonvoy app, including more than 5,700 hotels in North
America, Routh said. About 3,850 hotels in North America offer mobile key.
“Globally, we are on track to offer mobile key at more than 5,200 hotels by the
end of the year,” she added.
In addition to expanding digital check-in and digital key,
SVP of worldwide sales Frank Passanante said Hilton Worldwide is expanding
in-room technology, enabling guests to use their mobile devices through the
Hilton Honors app for certain aspects of their stay, including streaming media.
“Those technology-enabled hotels are expanding, and the trajectory is that we
will scale that in time,” he said.
Contactless payment is another area of focus. Mobile payment
is currently available at more than 2,500 Hilton hotels, “where guests can pay
with their mobile phones and smart watches by tapping their credit cards,”
Passanante said.
Room service and F&B ordering also have gone digital in
many hotels. “Touchless is absolutely part of the Covid recovery,” Hyatt’s
Vonderheide said. “You can now change the TV with your device, or order room
service by downloading a code. We will continue to look for ways to provide a
sense of security and safety to customers, and a lot will be through
technology.”
Accor in October also announced direct booking for its
meeting spaces in partnership with Groups360. The company’s GroupSync platform
will replace Accor’s current meetings website for RFPs before year-end.
Beginning in 2022, customers will be able to book meeting space in real time
using GroupSync Engage, with instant booking for guest rooms integrated in the
following months, Keller said. IHG, Hilton and Omni Hotels also added the
GroupSync Engage meetings feature earlier this year.
Best Western is in the early stages of some technology
programs, said SVP and CMO Dorothy Dowling. “We are very thoughtful with
hoteliers in terms of investments to make sure they will represent a long-term
solution and be livable in terms of the investment they make,” she said.
Sustainability, DE&I Importance
Sustainability and diversity, equity and inclusion topics
are increasing in importance to many buyers. “Buyers are extremely interested
in understanding those, and there has been more focus from the buyers’ side on
this,” Hammond said. “There certainly has been more information provided on all
those issues from the supplier side. Nobody wants to get left behind on either
of those topics. It remains to be seen how much those factors will ultimately
impact buying decisions.”
S&P Global has a supplier diversity initiative underway,
focusing on its top 100 suppliers. “Unfortunately, hotels do not fall into that
bucket because of the low level of overall spend,” Dery said. “That said, it
doesn’t mean we won’t add questions to the RFP to start collecting the data. If
we can put an icon on the online booking tool to show a property has a level of
DE&I or is using the ESG (Environmental, Social, Governance) acronym, it’s
worth promoting and great for us to do as well. Companies are being asked by
their own supply chains to document ESG, DE&I, and it makes sense in turn
they expect clients to do the same. We will have many new and more socially
engaged travelers, and they are very focused on these types of social
initiatives.”
Cvent Transient partnered with American Express Global
Business Travel to add 47 new questions to its RFP tool this year focused on
sustainability and DE&I. Rosenzweig said GBTA is working to add new
questions to its RFP template around the topics as well. “We expect it to be
available for the 2023 RFP season,” she said. “Everyone is coming out with
net-zero target dates. Travel is one of the biggest contributors to carbon
emissions. How do you control that without shutting down all of your travel?”