A majority—62 percent—of respondents to a flash survey conducted by HRS, a hotel solutions provider in business travel, foresee opportunities to reduce hotel room rates and gain more flexible terms and conditions for the balance of 2020 and beyond.
The global survey, which ran from April 30 through May 4, queried corporate travel program managers and procurement executives and offers guidance on the balance between hotel suppliers and managed travel programs as the business travel ecosystem looks toward recovering from the COVID-19 pandemic.
Other key findings from the survey:
- 51 percent said they anticipate issuing requests for proposals to achieve the goal of reducing hotel room rates and gaining more flexible terms and conditions.
- In exchange for hotel supplier flexibility as business travelers get back on the road, a vast majority of corporations are willing to commit to 15-18 month-long agreements. 81 percent of responding travel program leaders are willing to negotiate contracts for the balance of 2020 and the full 2021 calendar year.
- 58 percent anticipate reducing the number of suppliers they work with, offering preferred hotel partners the opportunity to win more share from existing corporate clients.
- 86 percent will prioritize hotel partners with revised, specific COVID-19 hygiene protocols.
“Our industry is suffering through previously unimaginable hard times, with suppliers and other parties all resource-challenged due to layoffs and furloughs,” said HRS CEO Tobias Ragge. “Procurement leaders understand this reality. However, they are also being tasked by their CFOs to renegotiate and develop precise financial plans focused on the costs they anticipate to get business up and running in the back half of 2020. This is particularly true for Fortune 500 global programs. Once safety protocols are in place, companies will authorize necessary trips to visit clients and pitch prospects. These survey results fall in line with what we’re hearing from clients across every vertical market.”
“Beyond the tragedy of the pandemic, this upcoming period looks like simple market dynamics at work,” continued Ragge. “Hotel suppliers have had the benefit of high occupancy and growing rates for more than a decade. With international travel stalled and leisure travel (especially to inner-city properties) reduced, business travel leaders correctly see savings opportunities as they focus on their core destinations and deliver volume for hoteliers throughout the week. Domestic corporate demand will play a decisive, leading role in this recovery. With corporations consolidating their programs and driving market share, proactive hoteliers have the chance to create strategic partnerships and grow beyond transient travel into higher-yielding groups and meetings volume with their preferred clients.”
“Finally, we see experienced procurement leaders choosing to renegotiate in these market circumstances as a way of demonstrating their value and the value of the managed travel program,” Ragge continued. “As we’ve seen in other recoveries this century (9/11, SARS), aggressive online travel agencies gain market share by undercutting outdated negotiated corporate rates. Today’s business traveler instinctively shops hotel rates more than ever before. It’s vital that managers promoting their managed travel channels for safety reasons have the best rates in those channels as well, as it directly impacts the integrity and reputation of the program across the company.”