Evolving Your Travel Program for the New Hotel Sourcing Environment

Are you prepared for the new hotel sourcing environment? Corporate travel within North America has already exceeded 2019 revenues and continues to rebound with vigor. A recent hotel data report by TRIPBAM indicates a 12% increase in corporate travel in a short time period (June to September 2022). Direct-View-White-Paper-Icon

Among shifting market conditions, hospitality buyers face rigorous challenges due to price increases, staff shortages, rising costs, and demand. Currently, hotel rates remain 10.6% higher compared to Q4 in 2019. With the goal of alleviating sourcing struggles, our Direct View Consulting Team has compiled a whitepaper to prepare you for this new procurement terrain.

To get you started, we touch on a few of the whitepaper highlights below and our findings for best buying practices.

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1. Rising costs will continue to shape market trends

Current hospitality market trends stem from increasing costs in energy, food, supplies, and labor. Additionally, a hotel account manager shortage will give suppliers the advantage as they become more selective about new business.

In this new climate, relying on brand loyalty and old procurement activities is no longer a viable option. Instead of simply reducing the preferred hotel list, buyers need to analyze market shifts and negotiate new deals. TRIPBAM recommends the goal of covering 80% of spend through special, negotiated supplier discounts.

2. Initiative-taking strategies are essential in Q4 and 2023

Getting ahead of the curve with a clearly defined strategy is essential. Here are some steps you can take to stay on top of your game:

Our Direct View Consulting experts can help you form a plan for the new procurement journey and take travel buying to the next level. According to Direct Travel's Susan Barnes, Managing Director of Hotel Consulting, the current environment presents both unique opportunities and notable challenges.

"In all of my years working with clients to secure the best rates possible for their hotel programs, I have never seen a time as volatile and unpredictable as we are seeing now,” says Barnes.

3. Identify tactics for optimizing spend

Such unfamiliar and fluctuating market conditions demand savvy procurement strategies. Experts recommend the following to optimize spend:

  • Rate shop and hotel cluster

  • Rely on pre-negotiated lower market rate caps

  • Encourage employees to book preferred hotels, avoiding top rated properties

  • Aim for static negotiated rates

  • Negotiating static rates is the best strategy for competitive pricing according to experts. In fact, the percentage of corporate travelers booking static negotiated pricing is at 31%.

To learn more about optimizing hotel purchasing, download our whitepaper for a deeper dive into 2023 trends.