Hotel reservations: real solutions for real optimisation

Ever tighter negotiations. With consolidation underway in the hotel world, this is probably what travel managers can expect. According to a recent study by the travel agency Carlson Wagonlit, the acquisition of Starwood by Marriott, of Fairmont Raffles by AccorHotels and, more recently, of Carlson Hotels by China's HNA are likely to have an impact on hotel rates. These major capital movements give these players much more clout to impose their views on the room rates offered to business travellers. Not immediately, of course, as the ink on these deals is still fresh; more likely next year, when contracts for 2018 will be negotiated. By then, the Marriott-Starwood combination will be a force to be reckoned with in many American business destinations - with more than half the hotels in Washington and Los Angeles, for example - but also outside the United States. The new giant will account for one-fifth of hotels in major cities such as Shanghai, Mexico City and Amsterdam.

MORE CHOICE FOR TRAVELLERS

However, it's not all bad news for companies used to dealing with these business hotel specialists. Because these mergers broaden the range of possibilities for travellers. For example, the acquisition of Fairmont Raffles enables AccorHotels to offer top-of-the-range hotels in North America, a market where the French group was virtually absent before. Similarly, in addition to an increased presence in Asia and Latin America, Marriott will be able to draw on one of Starwood's strong points - lifestyle - to offer a number of up-to-the-minute establishments that are much appreciated by travellers.

The fact remains. Even though it is the first group to exceed one million rooms, 'Marwood', as some observers call this new giant, often has only one or two hotels outside the United States in many markets. As a result, it is far from being able to meet the primary criteria of business travellers everywhere, i.e. an ideal location in relation to their meeting places. Despite these far-reaching changes, the hotel industry is destined to remain highly fragmented. Particularly when compared with the airline industry, where the International Air Transport Association (IATA) concentrates more than 80 % of global traffic around its 265 members. By contrast, of the 22 million rooms worldwide surveyed by consultancy MKG, just over 9 million are in the hands of hotel groups.

Admittedly, the penetration rate of so-called 'integrated' chains has risen from 42 % to 44 %, driven last year by the growth in supply in the major emerging metropolises. On the other hand, this figure shows that more than half the world's hotels are made up of a plethora of independent establishments. Of course, these do not always compete on an equal footing with the big business hotels when it comes to services. But they may be ideally located, or have an almost family-like approach to their clientele, and provide that extra touch of soul that travellers don't always find in standardised chains. In short, they too have arguments to make to appeal to business travellers.

The problem is that, until recently, the hotel offer contained in the GDSs - the electronic reservation management platforms on which travel agencies rely - was often limited to the best-structured establishments, the most likely to be present in the systems of these strategic intermediaries. With one major consequence: when business travellers don't find what they're looking for in the choices offered by their agency, they go outside the official channels to find the right establishment in the right place. And where do they find them? On online booking sites such as Booking or Expedia, which they are used to using to organise their holidays from a very comprehensive range. "At present, a significant proportion of hotel nights are booked directly, i.e. outside the traditional channels. For companies, these are invisible costs that are out of their control."says Paul Ponçon, Business Development Director at Concur France. The limited application of travel policy to accommodation results in a scattering of data, with the corollary of less than optimal reporting and fewer negotiating levers. Under these conditions, it is difficult to optimise the hotel budget as well as travel managers have been able to do with air or rail travel.

Difficult, but not impossible. For several years now, travel managers have been focusing their efforts on controlling the cost of accommodation. "Initially, companies tended to lower the authorised fare levels in order to optimise this budget. But they soon realised that they were going about it the wrong way, because this was causing frustration among their travellers.says Stéphane de Laforcade, founder of the HCorpo booking platform. Then, in order to organise their travel policies, they began to set up hotel programmes, which were paid for quite expensively by consultancy firms, and were often very large, with over 1,000 establishments. Without very precise data, travellers' main destinations were not always clearly identified, and neither were the volumes spent per hotel or per chain."

Hotel booking platforms such as HRS, HCorpo, CDS and iAlbatros have exploited these loopholes to gain a firm foothold in corporate strategy. To win them over, these pure players have come up with a few trump cards: extensive content, with their offer often covering more than 300,000 establishments, accurate reporting of expenditure and, last but not least, competitive rates, very much in line with the 'best buy' approach in vogue among companies. "We buy nights for hundreds of customers, not just one. So we can be better value for money"explains Stéphane de Laforcade. "Competitive rates are the sinews of warsays Emmanuel Ebray, Managing Director of HRS France. We have negotiated rates with 40,000 hotels that include a discount of between 5 % and 30 % on the available daily rate, all including WIFI, breakfast and the possibility of cancelling a reservation free of charge up to 6pm on the day of arrival."

BIG-NAME CUSTOMERS

These advantages have enabled these players to establish themselves as a real alternative to the large business travel agencies, or travel management companies (TMCs). So much so that companies are now issuing invitations to tender exclusively for the accommodation component of their business trips. HCorpo has become the hotel supplier for Thales, Société Générale and L'Oréal, iAlbatros for GDF Suez and Technip, and HRS counts companies such as Google, Hitachi and Schneider Electric among its customers. Companies that also appreciate their advisory role in structuring their hosting policy. Recently, HRS won the silver medal at the Purchasing Trophies along with Schneider Electric. "We retrieved their booking data and cross-referenced it with market data and our own data.says Emmanuel Ebray. With a database of 40,000 customers and almost 850,000 negotiated hotel rates, we can tell a company whether its rate is good or still in need of improvement."HCorpo also plays the same advisory role for one of its customers.which had a programme containing 1,300 hotels, says Stéphane de Laforcade. When we analysed it, we found that 300 of them had not received a single reservation. In the end, the programme now includes 200 establishments. It seems to me that the future is here, with negotiations concentrated on around fifty key establishments and the rest going towards bookings at the best rates."

With their positions now well established, the integration of hotel reservation platforms into the entire business travel ecosystem is continuing. Stéphane de Laforcade sums up a general trend in the market as follows: "We've come to the end of a long road. In a few months' time, we will have finalised the integration of HCorpo with payment method suppliers, ERP and self-booking tool publishers, travel agencies and GDSs."

Because, in response to companies' desire to tackle this vast nebulous area of the hotel business head on, the GDSs have also started to increase the density of their offer to enable agencies to propose more establishments. How do they do this? By integrating content from... hotel booking platforms! Since 2012, travel agencies have been able to find HRS' offering in Amadeus, and more recently that of HCorpo. At the same time, Europe's leading GDS has integrated the offerings of aggregators such as Albatravel and Bedsonline, so that its Hotel Plus solution now covers more than 320,000 establishments.

These developments have breathed new life into the business travel agency offering. If travel management companies want to stay in the game, they are aware that they need to step up their game on the accommodation front if they are to fulfil their role with their key account clients. At the end of last year, American Express Business Travel and the self-booking tool publisher KDS launched a centralised hotel payment service, presented by TMC as the "best in the industry".the most advanced end-to-end hotel solution on the market". The Hotel Hub agency's central reservation system is interfaced with the self-booking tool, as well as with the American Express virtual card, providing a high level of visibility on hotel expenditure. BCD Travel, meanwhile, presented its TripSource Hotels solution this year. "It will be rolled out by the end of the year.said Valérie Sasset recently in an interview on our website. This booking solution draws on several sources, both chain hotels and non-GDS establishments, and will be accessible via our mobile application."A subsidiary of online booking giant Expedia, Egencia also relies on cutting-edge technology: "We are seeing strong growth in mobile bookingssays Christophe Peymirat, Chief Commercial Officer of Egencia worldwide. We offer travellers extremely relevant content, with hotels included in the travel policy and all the inventory that travellers can find on a leisure site."

A SAFETY DIMENSION

Because it is also on the technology side that travel agencies are adding weight to their solutions. Last year, Carlson Wagonlit (CWT) integrated hotel reservations into its CWT To Go application. Travellers can now access their negotiated contracts, preferential rates agreed by the travel agency with hotel groups, and a database of 467,000 establishments worldwide. The result: monthly growth of 20 % in the use of this channel and a high adoption rate. "Travel managers appreciate the fact that their staff can use mobile booking, while at the same time strengthening their hotel programme and keeping track of their employees."says David Moran, Executive Vice President of CWT.

Increased adoption of booking tools is also part of a well-ordered risk management strategy. In addition to their own traveller tracking solutions, travel agencies and booking platforms have all forged partnerships with security players - International SOS, Geos, SSF and Anvil, among others - to feed booking information back into their localisation tools. Knowing whether an employee has checked in to a particular hotel or whether he or she has already left is one of the most accurate pieces of information available in the event of a crisis. It's the perfect way to reconcile two of today's top corporate priorities: security and optimising the accommodation budget.