The economy seems to be breathing a little easier, at least for the moment. That means business travel is back in a big way. If you want proof, look at the hotel occupancy rate (HOR) and average daily rate (ADR). According to STR Global, ADR is steadily rising in all four global regions. In the Americas, the July ADR almost hit $125, which was up 5.8% YOY. This is mirrored by Europe’s 8% increase to $133.24, EMEA’s 5.3% increase to $159.10, and APAC’s subtler 1.1% increase to $105.12. PricewaterhouseCooper’s 2015 Hospitality Directions Report, as summarized by Business Travel News, estimates that the year’s ADR will level out at about $120.79, which is up 5% from last year.
Loosen your wallet or loosen your tongue. 2016 Hotel Rate Negotiations are right around the corner.
What does that mean for you, Travel Manager Extraordinaire? It means you need to either loosen your wallet or loosen your tongue, because 2016 hotel rate negotiations are right around the corner. The way ADRs and HORs are trending, hoteliers have the upper hand, so bring your data to the table and be ready to make the argument that your customer fidelity should earn you some consideration when you set those room night rates with your preferred partners. Most importantly, make sure you have 100% of your data. If you don't have a high attachment rate through your TMC, this will make your job more difficult (and shame on you!). Make sure you're aware of your total spend at each property, no matter how your bookings are made.
Kelly Wagner, Director of Consulting Services at World Travel, Inc., has been keeping an eye on this steady uptick, and the WTI Consulting Services Team has already begun the 2016 RFP season. World Travel, Inc. clients receive the benefits of our Consulting Services Team, who orchestrates RFP season and maximizes the benefits you’ll get from hotel partners. As ADRs and HORs continue to rise, the more often your travelers book with your preferreds, the better your chances will be of securing better room night rates.
Ancillary fees are proliferating. Roll them into your agreements to avoid paying for them a la carte.
And you’ll need those negotiated rates, because hoteliers are also banking more this year from fees and surcharges than ever before, according to the latest report from NYU’s Tisch Center for Hospitality and Tourism. Those ancillary fees are proliferating. That means that when you agree to a room rate, it may not include “extras” or “amenities” that travelers are used to. Keep this in mind when negotiating with preferred partners – you may be able to roll some of those “extras” into your agreement, and avoid the need to pay for them as a la carte charges in your travelers’ expense reports.
The forecast looks good for hoteliers, so push those preferreds with your travelers, gather up your data using WorldReports™, and get ready for RFP season. We know we are.