Full-Service Travel Agencies Up Hotel Program Compliance For Corporate Clients

NEW YORK— Given the strength of the hotel business in many markets, corporate travel managers who negotiate hotel rates on behalf of their companies’ business travelers shouldn’t have been surprised to find many hotels looking for double-digit increases on negotiated rates for 2007. Full-service online travel agency Travelocity Business shed light on travel managers’ predicament in a briefing today in New York. “Clients certainly are feeling the pain of increasing ADR, lack of availability, and just significant cost pressures,” said president Ellen Keszler. “At the same time, as a general rule corporations don’t have great compliance with their hotel programs, certainly compared with the compliance they have been able to achieve with their airline programs.” For hotel owners facing a variety of online distribution options, it’s helpful to understand the pressures corporate travel managers are under, especially if a significant amount of owners’ revenue comes from business travel. Similarly, owners of hotels that do a high percentage of business travel bookings have begun using online distribution to drive. additional bookings to their properties on slow nights such as weekends According to statistics used by Southlake, TX-based Travelocity Business, companies that may have 70% compliance on the airline side tend to achieve hotel compliance more in the area of 35%-40%. Not being able to drive bookings to their preferred providers further hinders hotels’ willingness to offer more attractive rates. At best, clients will have 40%-50% of their hotel bookings within the managed travel program, which means they have 50% leakage with travelers opting to book direct or they’re booking online, Keszler noted. “But corporations are saying ‘We’ve saved a ton of money in our air program. But what’s the next thing for me?’ They know it’s the hotel program. They feel they have to get their arms around this hotel spend. So it’s about driving compliance.” Earlier this year, three-year-old Travelocity Business, which is part of Sabre Holdings, began requiring travelers at some of its clients to be more forthcoming about their travel plans. At the point of booking—either online or on the telephone offline—the agency has begun zeroing in on travelers who are booking an airline trip that entails an overnight stay, but aren’t booking a hotel. “We ask them to tell us why,” Keszler explained. “That very simple change has driven up compliance with hotel programs on average about 15 points. So if companies were at 30%, they’re now at 45% compliance. It’s proven quite powerful.” As ADR has risen dramatically in many markets, travel managers also want to ensure that the rates travelers are getting, particularly on peak nights, are competitive with the rates they’ve been able to negotiate in those markets. “Travel managers are under as much pressure as ever about keeping a lid on costs,” Keszler said. Security concerns, meanwhile, remain another of the big drivers why corporations want travelers to book through their managed program. “Clients simply need to know, should there be an emergency, where their people are on any given night,” she noted.