When It Comes to Your Hotel Program, Knowledge Is Power — And Can Lead to Extra Savings

By Cindy Armitage and Jackie Visnic

A hotel program has two distinct functions: There’s sourcing — identifying, evaluating and negotiating with suppliers — and then there’s ongoing program management (OPM) — i.e., monitoring the results of the sourcing engagement.

Most companies spend more time, money and effort on the sourcing aspect, but the OPM of a hotel program is of equal importance. Knowing whether or not your travelers are staying at your preferred hotels at your negotiated rate is paramount for a best-in-class hotel program.

To give you a sense of how you are doing with the OPM of your managed hotel program — and figure out if you may be leaving money on the table — try to answer the following questions:

• Do you have a clear and defined travel policy?
• Is your policy easily accessible to travelers?
• Do you track and report when travelers are not booking hotels within policy?
• Do you have a “social travel page” where employees can go for the latest information, start conversations and ask questions?
• How much do you spend with your preferred/contracted hotels?
• How many hotels do you source in your key volume markets?
• Do you believe you have enough coverage?
• Do the majority of your travelers stay at these hotels?
• Have you performed a gap analysis to determine if you are accurately covered?
• How much do you spend in “unmanaged” markets?
• What is your strategy to cover markets where you do not have the volume leverage to negotiate individual hotels?
• Do you have a formal sourcing process to select, monitor and negotiate the multitude of details with suppliers?
• Do you aggregate sources of data to conduct your analytics?
• Do you benchmark?
• What do you benchmark against? Peers? Volume? Amenities? Market?
• Do you have a negotiation strategy during the sourcing of preferred hotels?
• Do you know what the market is predicting for the coming year?
• Are you able to measure the results of your strategy?
• Do you track the results of your incremental estimated impact throughout the process?
• Can you easily identify and report which properties are most impactful to your program?
• Are you able to communicate to management the results and why?
• Do you regularly manage your program during the year to understand compliance and preferred rate utilization?
• Do you know the percent of leakage of travelers who do not book via your preferred channels?
• Do you know how frequently or infrequently you obtain your negotiated rate?
• Do you know where your travelers are in an emergency?
• Do you have a travel risk management or duty of care guide outlining what your travelers need to do and who to contact in an emergency when they are on the road?
• Do you provide travelers with destination intelligence?

Your answers to the questions above are an indication of how much insight you have into your program and if you are maximizing your hotel program dollars.

Another factor that may be affecting your hotel program dollars is the fact that many hoteliers utilize yield/revenue management tools with the goal of increasing profits. These automated tools — which are similar to the ones airlines use to control pricing — harness sophisticated and stringent algorithms with the sole objective of increasing hotel revenue. For instance, are you aware that these tools target Tuesday and Wednesday night stays, the most frequented days for business travel? Revenue management tools restrict your travelers’ ability to book the contracted rate you worked so hard to obtain. It’s for this reason that ongoing monitoring of your program is essential to gaining visibility into the rate being booked.

Knowledge is power and can lead to valuable actionable next steps. Grasping all the key components of a hotel program is critical not only for understanding compliance, cost impact and rate availability, but more importantly, for the direct impact it can have on duty of care and traveler satisfaction. When you have a strong OPM process, you also will be able to:

• Understand where and how often your travelers are staying and if they are getting your negotiated rate
• Analyze the impact of actual vs. projected hotel costs
• See how market-level supply and demand trends influence your program

Having a strong OPM process begins with a clearly defined travel policy so that travelers understand what is expected of them. Once one is in place, there also needs to be continuous monitoring and reinforcement of the policy as well as necessary adjustments. When you do make tweaks to the policy, make sure to get your travelers’ feedback. A hotel stay is a very personal experience, so your travelers should be engaged with your program’s objectives.

To help make your hotel program a success, below is a diagram outlining four essential steps to take.

If you are interested in learning how you could manage a best-in-class hotel program, reach out to American Express Global Business Consulting for a tailored program assessment.