Client Hotel Programs Recent trends, new directions and best results.

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1 2/545 Queen Street, Brisbane QLD Australia 4000 Within Australia: Outside Australia: Published: 1 July 2012 Author: David Strickland, Product Manager, Flight Centre Global Product Contributors: Catherine Rankin, Product Development Manager, Flight Centre Global Product Scan now to download this white paper as a PDF Australian OpCo Pty Ltd (ABN ) trading as Corporate Traveller. Licence numbers: NSW 2TA002547, VIC 32360, TAS TAS160, ACT , QLD , NT LTA149, SA TTA192799, WA 9TA1362. All Rights Reserved. Re-production and distribution of this publication in any form without prior written permission is forbidden. While every endeavour has been made to supply accurate information, Corporate Traveller shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice. COT51437

2 Businesses with significant volume of hotel accommodation are turning to TMC managed Client Hotel Programs to get more value from their investment. Overview With only a two per cent increase in new hotel supply for Australia during the next five years and demand for hotel accommodation steadily rising, rates are expected to remain strong. As a result businesses will increasingly be looking for ways to gain more value from their spend on travel. During the past 12 months, this pursuit for more value has seen many businesses in Australia become more reliant on travel management companies (TMCs) to enhance their booking and buying strategies. This is none more so evident than in the hotel sector where a TMC managed Client Hotel Program is now a crucial strategy for companies with a large investment in accommodation. For companies that book more than 2,000 room nights per annum, spend more than 100 nights in one city and have employees that travel to several destinations regularly, a Client Hotel Program will not only provide the best rates but also the best choice of properties for your business. During the past 12 months, our corporate travel professionals have helped companies with significant room night volume, save anywhere between $10,000 and $50,000. These savings are the result of a tailored Client Hotel Program that are specifically designed to help companies manage and reduce their accommodation costs. Corporate Traveller s Client Hotel Program is based on strong relationships with hotel suppliers, professional expertise and rates which are exclusively negotiated for your company. Recommendations If you answer yes to the questions below, Corporate Traveller recommends moving your hotel procurement process to a specially developed Client Hotel Program: y Do you book more than 2,000 room nights per annum? y Do you spend more than 100 nights in the one city? y Do your employees travel to several destinations regularly? Businesses with TMC managed accommodation and negotiated rates will be in the best position to combat rising hotel rates for the short and long term. Table of contents Overview 1 What s on trend? 2 Who s achieving the best value? 3 How Client Hotel Programs deliver the results 3 How companies benefit 4 Future directions 4 Corporate Traveller s Client Hotel Program is recommended for any company with high volume accommodation needs. Page 1

3 Corporate Traveller s reporting indicates that one in three hotel bookings is either cancelled or changed, which illustrates how important flexibility is for corporate travellers. With the business sector continuing to focus on value in travel, do you ever wonder how your hotel rates compare with those paid by your competitors? Or who is securing the best deals in corporate accommodation? In this paper we reveal key developments in hotel procurement and preference, and the strategies being used by companies to achieve the highest ROI. What s on trend? Over the past 12 months, a number of changes have occurred in the way businesses and their travellers have selected and booked accommodation. These changes, which clearly point to the ongoing search for competitive rates and all-round value, include the following: Slowdown in third party website usage According to the March 2012 Travel and Tourism in Australia report by Euromonitor International, the rate of growth in third party corporate travel bookings/ transactions has dropped. While the Global Financial Crisis saw many businesses book their own travel online in an effort to cut costs, the past year has seen more of a return to the use of corporate TMCs. This is the result of growing corporate realisation that last minute rates are neither the most cost-effective nor practical solution. Offering little flexibility, last minute rates can be far more costly when booking changes are required, and are certainly not error-free. Corporate Traveller s reporting indicates that one in three hotel bookings are either cancelled or changed, which demonstrates how important flexibility is for corporate bookings. Additionally third party online bookings fail to offer the expertise, guidance and all-round security of a TMC, which can save your business time while providing peace of mind for your travellers and efficiency for your budget. More companies also now understand the benefits of hotel supplier relationships held by large agency groups such as Corporate Traveller. These relationships enable strong negotiation on price and deliver rates that can be even lower than those advertised on last-minute sites. For those who only have time for last-minute bookings and know their travel plans will not change, there is the convenience of quickbeds.com. Owned by Corporate Traveller s parent company Flight Centre Limited, this site offers excellent rates that can be securely booked by your Corporate Traveller consultant or through your own corporate login. Quickbeds.com provides a well-priced booking alternative for companies that are fully aware of, and comfortable with its terms and conditions. Business travellers becoming business tourists According to a recent study by GDS giant, Amadeus, hotels are starting to focus more on creating a home away from home for corporates, allowing them to take both their business and social life with them when they travel. More and more, company travellers are looking for opportunities to add an element of leisure to their business trips. Hotels appear to be recognising this need and progressively adapting their amenities and services to fit. Tapping into the trend of fusing business with leisure are chains such as IHG, which has recently launched a new line of health and wellness properties. IHG s EVEN properties feature rooms designed for workouts with coat racks that double as pull-up bars, luggage racks that can be used as a work-out bench, yoga mats and a circuit training guide with routines that can be done without having to leave the room. Smarter Information and Communication Technologies (ICTs) are also being introduced to hotel design to allow travellers to access everything they would normally use in their home environment eg. music, video, photos and other data in the comfort of their hotel room. As most travellers are now equipped with smartphones, laptops and/or tablets, hotels will focus not so much on providing these tools, but on delivering advanced ICT infrastructure. Page 2

4 The use of tailored Client Hotel Programs has increased and will continue with the cost of rooms expected to rise. Demand and rates staying strong Global expense management specialist, Concur, offers valuable data based on the profiles of some 15 million travellers. This data reveals corporates in Australia are continuing to feed good occupancy levels in hotels in the key capital cities such as Sydney, Melbourne, Perth and Brisbane. Hotel rates in these cities are now among the 10 highest city room rates in the world. While some hotels reduced their rates during major refurbishment programs, rates ultimately are expected to rise. With domestic business travel remaining robust and supply levels in the capital cities staying relatively stable, there are no signs of rates falling any time soon. STR Global reports that during the next five years, Australia s domestic hotel sector will only see a two per cent increase in new hotel supply. The combination of growing demand and limited increase in the number of new properties being built, will impact rates and hotels are likely to offer fewer discounted room nights. However, companies can minimise the cost impact by tapping into negotiated rates secured through a Client Hotel Program. Who s achieving the best value? With more companies returning to TMCs for their accommodation management, Client Hotel Programs have emerged as a key strategy in cost cutting. Companies booking more than 2,000 room nights per annum have been particularly focused on achieving the best possible value for their sizable investment. As a result, the use of tailored Client Hotel Programs has increased and is likely to continue with the cost of room nights to potentially rise. In assessing your company s overall travel program, Corporate Traveller will look at three main criteria to determine if your business is better suited to a TMC managed Client Hotel Program. This criteria includes: y Does your business book more than 2,000 room nights per annum? y Does your business spend more than 100 nights in one city per annum? y Do your employees travel to several destinations regularly? If you answered yes to these questions and your hotel rates have not been specifically negotiated for your business, you may not be getting the best deal. How Client Hotel Programs deliver the results In some cases, Client Hotel Programs have saved companies thousands of dollars per annum. Client Hotel Programs are designed to help each company manage and reduce their accommodation costs with tailored strategies. The best of these programs are built on strong relationships with a vast range of properties including major hotel chains, independent hotels and serviced apartments throughout Australia and the world. Through these relationships, discounted rates can be exclusively negotiated on an individual basis and the program is designed to meet the unique needs of each company s budget and travellers. In the case of Corporate Traveller s program, this includes all evaluation, negotiation of rates and implementation, saving companies substantial time, energy and cost. Page 3

5 Businesses are realising both hard and soft dollar benefits from using Client Hotel Programs. How companies benefit Businesses are realising both hard and soft dollar benefits from using Client Hotel Programs as part of their overall travel management. Corporate Traveller s Client Hotel Program will lower the total cost of accommodation and simplify the procurement and booking process by: y negotiating room rates that are lower than standard available rates and in some cases, even lower than last-minute rates advertised by third party online agencies y negotiating value adds where possible eg. complimentary Wi-Fi, drinks and meal vouchers, airport transfers or parking etc y pursuing opportunities to consolidate rates with hotel chains Future directions In the years ahead and as value, location and amenities continue to be the main drivers in hotel procurement, the ability of TMC-operated Client Hotel Programs to deliver cost efficiencies is expected to grow. Client Hotel Programs that remain acutely focused on the needs of each client, maintain close relationships with individual properties and increase their booking volumes, will be in the best position to negotiate the most competitive rates for corporate clients. For companies with a high or growing level of accommodation investment, Client Hotel Programs will be a crucial strategy for containing costs and increasing savings in a demand-driven environment. y saving travel bookers time by providing a select choice of preferred properties in each city that are convenient and comfortable for travellers y encouraging a higher level of booking compliance across the company, which cuts unnecessary expense y regularly benchmarking each client s rates against the industry average and other clients, and re-negotiating with suppliers if those rates become uncompetitive. Page 4

6 about corporate traveller. Corporate Traveller is a leading travel management specialist for the SME market. We offer a unique combination of expert advice, local personal service and global negotiating strength to maximise your savings. The Corporate Traveller team is the best in the business. Our travel experts are highly experienced and have exceptional product knowledge to deliver airfare and accommodation options that will have an immediate and positive impact on your bottom line. Our flexible business model is shaped to match the distinctive needs of SMEs, enabling us to better understand your travel requirements, offer tailored solutions and build long-term partnerships. Learn more Call: enquiries@ Visit our website: www. Visit our blog: