HOTELMARKETING.COM

Keeping buyer control of hotel rates

November 24, 2009 | Hospitality Industry

According to a new BTN report, large market buyers are keeping hotel rates under control by boosting compliance, compiling data to benchmark their performance by city, follow-ing such best practices as vendor consolidation and enacting tiering down strategies.

While large market buyers generally paid higher luxury and upscale hotel rates, there was very little difference in the overall aver- age daily rate they paid last year compared with Corporate Travel 100 companies. BTN’s survey showed the overall average large market rate in 2008 was $156.50, compared with a CT100 average rate of $155.30.

Large market buyers reported domestic hotel compliance levels mostly within the 50 percent to 69 percent range. Hotel compli- ance is trickier than other travel components because of the sheer volume of hotel supply, location issues that might not make a preferred property the best choice for some travel and legitimate reasons to book outside of preferred properties, such as traveling to an area that has no preferred properties or attending an industry event where a non-pre- ferred property has a negotiated group rate, said Bob Brindley, BCD Travel consulting unit Advito’s vice president of business development.

Large market buyers can increase negotiating leverage in a buyer’s market by cutting the number of hotels in their pro- gram. “In the past, they might have needed five to 10 hotels in a city, not because of market or location needs, but because it was harder to get a room,” he said. “Now, with occupancy down, they can streamline to three or four hotels and deliver a bigger share of their business.”

Download BTN’s 2009 Large Market Benchmarking Report at BTN (PDF 450 KB)

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