Hotel reshopping and analytics technology provider Tripbam says corporate travel managers should be working to obtain discounts in their contracts now, before rates and occupancy start to increase as business travel returns.
Analyzing the impact of the COVID-19 pandemic on the corporate hotel space, Tripbam says it has found shifts related to rates, star rates, locations and booking trends. The data, included in Tripbam’s Quarterly Market Report, comes from the corporate transient travel bookings of its 2,000 clients around the world.
The average market rate at the end of January – which is the lowest corporate rate available in a market – is down 41% compared to the same time last year, dropping from $205 to $120, while the average booked rate has dropped from $175 to $116.
Tripbam CEO Steve Reynolds say rates continue to trend down.
“Volume has kind of flatlined or it’s trending up a little bit for seasonality into January, but the rates continue to go down,” he says.
And data about traveler booking behavior reflects that: Tripbam says corporate travelers are booking the negotiated static or flat rate less often – down 37% year-over-year – while the booking of publicly available rates is up 46% and loyalty rate bookings are up 583% in that same period.
“The static rate I negotiated, that I rolled over, is exceptionally high, so what I thought was a 25% discount when I did the deal back in 2019 for 2020 is now only 5 to 10% above the best available rate,” Reynolds says.
“You’ve got to get a rate that’s more in line with reality. You can’t rely on historical data anymore to determine or benchmark that discount.”
A buyer’s market
Instead, Reynolds advises travel managers to view this as a “buyer’s market,” and to go directly to specific hotels now to negotiate the best discounts, before rates and occupancy start to increase.
He says buyers will also need to “manage through rate volatility” – which he expects to remain high as hotels reopen, supply increases and hotels try to generate demand by lowering rates.
At the same time, corporate travel managers should closely monitor their LRA (last room availability) performance – which is supposed to guarantee the company can book at the contracted price, regardless of how many available rooms are left.
“What travel managers forget is revenue managers have the ability to turn [discounts] off whenever they want,” Reynolds says.
“Because of COVID, there’s greater pressure on revenue managers to turn off the discounts. I need to drive RevPAR, so I want to sell this room at as high a price as I possibly can.”
Other findings from Tripbam’s analysis: The average star rating of hotels booked has decreased by .4 compared to last year and length of stay has increased by one day. Comparing the large chains, Hilton has gained 43% in corporate market share compared to the same period last year, while Marriott International has decreased 22%. Reynolds says all of these trends are a reflection of the type of people traveling now – primarily essential workers who are choosing a different type of hotel than traditional business travelers. And in the case of the chains, Hilton’s portfolio offers more down-market properties than Marriott.
“It used to be Marriott was by far the dominant chain across corporate transient. Now, because of the type of hotels they have, Hilton has tied Marriott if not surpassed them in terms of market share across corporate transient travel,” he says, adding that this can be advantageous to travel managers.
“It’s a little bit of a fresh air in that Marriott was a tough negotiator.”