What are HRS's short-term ambitions on the international business travel scene?
Mathias Warns - We aspire to be the leader in hotel solutions for business travel within the next five years. In concrete terms, this means that we are aiming to be in the top 3 in the fifteen most important business travel markets in the world, which includes the main European countries as well as China, Japan, Korea, North America, Brazil, Australia and so on.
Where does HRS stand in the French market?
MR W. -We're not yet in the top 3 on the French market, let's say in the top 7 at the moment. That's also why we have such a strong presence at the various events linked to the business travel market, and we intend to grow quite rapidly. But the market is highly fragmented, with TMCs, hotel platforms and the various service providers that play a role in this market. So a leader will never achieve 50% market share, but rather 10 or 15%.
What are the differences between the French and German business hotel markets?
MR W. - The French market stands out in Europe because of the dominant position of Accor, and therefore of the chain hotel industry. In France, there is still a high proportion of companies that work with bill backs. This is virtually no longer the case in Germany. Travel management processes have not evolved as quickly in France as they have in Germany. It's a cultural thing. It's also strange, because the rate of use of personal bank cards is much lower in Germany than in France.
What are the keys to differentiating yourself from your competitors?
MR W. - Our first added value is based on truly global hotel content, and not just focused on Europe. In fact, our second largest presence is in China, where we currently employ around 150 people, with a hotel content of around 50,000 establishments, when a traditional GDS generally provides access to 9,000 hotels... We also cover all second, third and even fourth category destinations. We have a real presence in the region, covering all these up-and-coming regional metropolises. So our coverage is much greater than what you'd find in a travel agency, for example.
HRS is a regular fixture on the business travel scene,
such as the GBTA Europe convention held in Berlin in mid-November (DR)
The hotel catalogue remains HRS's priority...
MR W. - Our core business is content. So we're focusing on global coverage, with an emphasis on independent hotels and small chains. If we look at business travel, outside countries like France and North America, over 60% of corporate overnight stays are in independent hotels. In France, more than 50% of corporate overnight stays are in chains, due to the Accor network. In North America, this figure rises to 80% in chain hotels. There is a Marriott and a Hilton in any city in the United States. In Germany, chain coverage reaches 25%.
Is this balance changing?
MR W. - All the big chains have investment plans, but these represent only a fraction of the total number of corporate overnight stays, and are concentrated in the biggest cities. Our added value therefore lies in access to these small chain or independent hotels, by negotiating with them a range of business services. A major company's hotel programme includes between 1,200 and 2,000 hotels worldwide. Very often, this hotel programme is only used for 50 nights per year. The benefit to the company is therefore minimal, given the complexity of managing such a hotel programme. The majority of hotel programmes in large companies are highly inefficient, whether in France, Germany or elsewhere. It's better to focus sourcing on hotels that generate a lot of overnight stays - typically between 250 and 500 nights a year minimum for a meaningful negotiation. Below this level, we negotiate business rates that are generally more attractive than what a company can negotiate with these hotels.
Is there still a place for leisure travel since the adoption of the new HRS Corporate identity?
MR W. - Yes, of course. The HRS Group now comprises several entities. We therefore have a multi-brand strategy for leisure travel, while we have introduced a common branding, "HRS Corporate", for the business segment. But our BtoC strategy, which targets leisure travellers and very small businesses, will continue. These are mainly citytrips: weekends in London or Paris, not fortnight breaks in a purely tourist destination. We're concentrating on short stays in major cities, because that fits in with the content we need for our corporate business: we sell the same hotel during the week to business travellers and at the weekend to leisure customers.
In addition to "traditional" hotel reservations, what other areas do you cover?
MR W. - We offer a range of complementary services to cover the entire value chain around this core business. Starting with assistance to companies in managing their hotel programme, based on benchmarking and analysis of hotel contracts, trying to optimise these hotel portfolios, and then carrying out all the negotiations for our clients. It's a modular service: the client can delegate all these services to us, or take charge of certain aspects themselves.
You are replacing the travel agency on this project...
MR W. - We're replacing it on the consulting side. We only do hotels, so our expertise is far superior. We have a team of 70 consultants who do just that. We can rely on a far greater volume of data and benchmarks, with 40,000 corporate clients managed worldwide. As a result, we can offer highly accurate benchmarks for negotiable rates. What's more, we include both our corporate data in these benchmarks, as well as leisure data, so that we have maximum visibility and transparency on the market. So I dare say that the quality of our bechmarking is far superior to that of any other TMC, simply because of the volume of data.
So the hotel business is a specialist affair, too complex for a 'generalist' TMC?
MR W. - I know this world well, having worked in it for a long time. TMC has developed a much broader approach, covering hotels, air, etc. You have to realise that these are very different markets. In the airline sector, we can base ourselves on a maximum of around 400 companies. An average company will generally use no more than 25 carriers. In the hotel industry, there are between 500,000 and 800,000 corporate establishments worldwide. It's much more fragmented. You need real specific expertise to get the best results.
What about payment?
MR W. - This is another major area of our expertise: payment solutions. In the airline industry, payment is relatively automated and paperless, at least in large companies. In the hotel industry, however, it's complete chaos, with personal credit cards, bill backs, travellers paying out of pocket and getting refunds, invoices disappearing, and refund policies that are too imprecise... So we offer a range of services to organise this chaos. The virtual credit card replaces the plastic card, and the platform generates a virtual card number used to guarantee and pay for the hotel service. The invoice is then sent directly to a partner who manages the dematerialisation of the invoice and the return of the data. As a result, there are no more problems of loss or errors, and the quality of the data is far superior. The entire payment process is centralised, with no need for passenger intervention. This is something that we introduced fairly recently, and that we are in the process of developing in a number of countries, although it also depends on the virtual card providers. The offer has been working well in Germany for several years. It's now working in France, since Air Plus has launched its Aida platform... It's one of the services that we're in the process of developing strongly, and extending to all the key regions of the world so that it can be used optimally.
And mobile?
MR W. - M. W. - The mobile booking rate is 30% in the leisure segment, including tablets. In the corporate segment, the situation is much more complex. There are three types of needs and mobile strategies used. The first is simply to prohibit mobile booking, and this is the majority of cases. A minority of customers, most often in Europe, want an application capable of covering the entire journey, and not just hotel reservations. We don't respond directly to this need, but we do work with service providers who offer this type of tool, by including our content in their solution. The third type of demand, which is mainly expressed in Asia, concerns a specific corporate mobile application, with access to negotiated rates. We can meet this demand by developing a corporate version of the leisure mobile application, depending on customer demand. But this is a cultural specificity that is unique to Asia, where business travellers are particularly keen on mobile solutions.
So the mobile revolution that has been predicted for several years has not yet taken place?
MR W. - No, not yet. What is emerging mainly concerns the applications developed by the major hotel chains for checking in and out using your smartphone. We are studying this development, looking at what is being done, and preparing to integrate such functionalities. But we're not there yet, we're still in the pilot phase. We're looking at three to five years. In the area of corporate reservations, the use of applications is still fairly limited.
How do you explain this reluctance on the part of the corporate market?
MR W. - The company wants to retain control, and business travellers don't necessarily want to accumulate applications for every aspect of their trip. This creates complexity that adds no value. If it's a question of saving three euros by wasting two hours on each booking, where's the added value?
Do you plan to invest more in the Meetings & Events sector?
MR W. - We already offer this functionality, both online and offline for larger events. This business is set to grow, in line with the market. The problem with this sector is that, unlike business travel, there are very rarely centralised decision-making structures. In events, the population of decision-makers is highly fragmented.
So the Meetings file has not yet been retrieved by the Travel Manager?
MR W. - No. With the exception of certain companies, the movement is very slow. This is the case in almost all countries. It's a difficult issue to manage, with major differences from one company to another. It is also complex to develop a single solution, to standardise, given the diversity of the types of event.
DR
What is your view of Airbnb, a newcomer to the corporate market? Will HRS one day integrate this type of inventory?
MR W. - Not in the short term. Nor in the medium term, for that matter... The use of Airbnb is very limited in the corporate sector. We're talking about very small businesses, teams sent on site for a long period... But we don't see the point of a short stay. It creates a whole host of problems, particularly in terms of billing and security. So I'm very sceptical on this subject, particularly with regard to the service provider, who in this case is a private individual, and who won't bother with the standards expected by the company in terms of invoicing. Business travellers expect hotel services during their trip.
And what about Booking, whose ambitions are becoming clearer in the business travel sector?
MR W. - Booking and CWT already work together in certain markets such as Italy. But Booking refuses to charge negotiated rates or to offer corporate rates. Travel managers may choose to offer their travellers as wide a choice as possible. Booking-type content can then meet this expectation. But most want to offer a targeted choice. The focus is clear, and is on a centralised offer. We then offer them much greater added value. This depends on the size of the company and the cultural background: in the United States, faced with pressure from travellers, Travel Managers are more inclined to offer a fairly wide choice. In Europe, it's more of a directive strategy, with a very controlled offer.
Won't the famous generation Y change all that?
MR W. - Not in the medium term. It's the company that pays, and the traveller is not travelling for pleasure but for business. They are not being paid to book their trip. If they lose time when faced with a plethora of choices, it's not in the company's interest. Ideally, the traveller should be able to book everything at the click of a button, to optimise employee productivity. Companies will therefore remain focused on making the booking process as simple and efficient as possible. Gamification and all these new names are just hypes, short-term trends that I believe will disappear. From an economic point of view, there's no point.
