Many hotel companies this year launched aggressive marketing campaigns offering special rates and other perks to travelers who book directly from their branded websites. Yet when it comes to business travel, it is still the employer who, in principle, decides which hotels employees can book.
Most large corporations have established travel policies that require employees to select hotels from a preferred supplier program. Policies also generally dictate that reservations be made through corporate booking tools and designated travel management companies.
So how do corporate travel buyers decide which hotels end up in their programs? And what role does the travel management company play in supporting them?
In this first of an occasional blog series inviting discussions with executives from across the global travel spectrum, we talk with Geert Behets, head of global travel, meetings and fleet management for the Belgium-based pharmaceuticals company UCB.
This week he explains how his company chooses preferred hotels. In our next posting, he will talk more about partnerships and give his views on issues like dynamic pricing.
What are UCB’s criteria for choosing its preferred hotels?
Property selections are based on “the best balance of location, price, convenience and comfort for our travelers,” said Behets. “Location is the number-one factor, but hotels cannot assume that the business is theirs just because they are nearest to where the client needs to be.
“There is a hotel right in front of our headquarters, but it has not been on our list for the last five years because the quality is not what it needs to be. Some UCB travelers will stay there anyway because the next nearest hotel is 12 kilometers away (7½ miles). It would win a lot more business if it were part of the program.”
Behets said price is important, and UCB specifies caps in each city that dictate the maximum rate employees are allowed to pay per night. However, he notes, “We think a lot about traveler centricity (convenience and location), so we do not just look at price. We are willing to pay a little more if there is a value to it.”
How does UCB handle its RFP process?
Given UCB’s operations in 40 countries, Behets and his team do not have the time to handle many hotel negotiations in person. Instead, they outsource requests for proposals to HRS, a well-known intermediary in the managed hotel business. HRS also creates and manages the RFP process for many other corporate clients in Europe.
One deal-breaker for Behets is whether a hotel will guarantee last-room availability, or LRA. “We don’t want just one room per night at the negotiated rate before we are blocked out,” he said, adding that some hotels try to limit their LRA agreements by restricting them to a few room types. He and HRS make regular checks to ensure UCB travelers are denied corporate rates only when a hotel is sold out.
However, while most of the heavy lifting is done by HRS, Behets still plays a significant role. He extracts lots of data from UCB’s global expense management tool, including information about rates, room nights and how much UCB employees generally spend on hotel extras. He forwards that data to HRS, which shares it with potential suppliers. In general, Behets said, the more transparent clients are with suppliers about exactly how much they spend and how many beds they can potentially fill, the more generous hotels will be with discounts on negotiated rates.
Behets also maintains a worldwide network of UCB employees who tell him which hotels they would like to include in the preferred program. A requirement is that the price must be lower than UCB’s city rate cap and include breakfast and wireless internet service.
Safety and security are key elements of any RFP. Despite recent high-profile terrorism incidents, “the most important security questions are still about things like smoke alarms, because fires and other accidents are the bigger risk,” Behets said.
What has been your experience working in the corporate travel space? How do you think hotel/corporate buyer relationships can be improved?