Hotels are starting to learn how to leverage supply and demand, a skill perfected over many years by the airlines, in order to ‘fill’ their room inventory and remain sustainable.
Think rooms rented by the hour for business travellers, using data to predict travel behaviour and charging for ancillary products.
Sean Hennessy, a New York-based hotel consultant, describes the hotel yield battle as one in which hotels are focused on trying to generate as much revenue as possible from a single room. Taking advantage of empty rooms during the day – hour-by-the hour – is just one way of doing that.
Fuelled by technology, measuring supply and demand has become a true science. Powerful computers handle the many tasks essential for revenue management, says Ryan Potgieter, Flight Centre Business Travel South Africa Brand Leader. “This is just as well since we’re now dealing with smart data to predict consumer behaviour to sell each room night at the highest possible price. “
Sophisticated Property Management Systems (PMS) are used to provide data that helps define customer behaviour and purchasing trends so that the highest room rate can be achieved, a task that would be impossible to do manually.
It may also be impossible to ‘outsmart’ those computers if you’re a consumer or corporate, which is where a Travel Management Company (TMC) like FCBT can add true value.
The good news is, there’s no reason why corporates can’t leverage lower hotel rates as a result of revenue management-induced fluctuations. Typically we see corporates locked into negotiated rates that gives them no room to manoeuvre. The negotiated rates may be lower from time to time, but we find that flexibility affords the corporate with better rates much more often than they would think.
Even after a hotel room has been booked, TMCs like FCBT can manage our customers’ hotel spend dynamically and achieve great savings. Although many hotels have begun to block preferred rate availability, especially during high-demand times, FCBT can provide real-time hotel content and monitor pricing so we can book hotel rooms at a lower rate.
Although you could see the availability of distressed hotel inventory as an opportunity for travel buyers, it is important to understand it is not the only way to achieve hotel savings in your corporate travel programme. Distressed inventory rates are a very small piece of the savings puzzle and travel bookers should be aware that low prices can be deceiving.
This is particularly true when corporate travellers start booking outside the preferred channel. What seems an attractive overnight rate could actually prove more expensive than the negotiated bundled rate, especially if it’s outside travel policy.
Employees making their own travel arrangements outside the mandated travel supplier can create headaches for corporate bookers trying to manage costs and monitor their travellers. The hotel booking effectively falls beyond the control of the travel booker, and if the travel policy has been ignored in this case, who knows what expenses will be incurred with such add-ons as WiFi, dinner, breakfast, etc. You’ll need to try and reconcile it to get a comprehensive overview of your travel spend.
The new ‘normal’ will be that hotels will expand revenue management to areas of the business other than hotel rooms. We’ll see hotels applying aggressive pricing strategies to elements such as food and beverage, meeting and event spaces, room upgrades and even loyalty programmes. But if you take advantage of FCBT’s SmartSTAY programme, your travellers can enjoy ‘ancillaries’ or supplementary services such as Wi-Fi, room service and early check-ins free of charge.
Ask your FCBT account manager about our SmartSTAY programme and ensure you’re getting the most out of your hotel bookings and FCBT’s global contracts.