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HomeTourismHRS Intros "Convergence" to Drive Deeper Lodge Negotiations

HRS Intros “Convergence” to Drive Deeper Lodge Negotiations


HRS and the Global Business Travel Association today
released a research report that suggests a sourcing strategy HRS has defined as
“convergence” to combat rising hotel rates. The report cites “the declining
importance of corporate travel,” when compared to leisure travel, as one of the
challenges buyers will face in the when negotiating their programs for 2024.
That’s combined with rising occupancies in major business travel markets and a
high inflationary environment overall for travel and hospitality.

“Some of the ways suppliers have seemed to be making changes
to sales tactics suggests that buyers will have to show the value—to bring
volume to hotels and market share to airlines—to get the discounts they may
have gotten in the past as a matter of habit,” said GBTA senior research
manager Mark Sharoff, who led the study.

Buyers know the market is tough. According to the HRS/GBTA
survey, 77 percent of buyers believe their next negotiation with suppliers will
be more difficult than the last. They rated the more consolidated airline market
as their No. 1 challenge. The fragmented lodging sector came in a close second,
but it wasn’t a single picture for lodging types across the board.

While 55 percent of respondents told researchers it was
difficult to obtain favorable rates for hotels during their previous RFP
exercise, less than half that number (23 percent) said it was difficult to
obtain favorable rates for small/simple meetings and 34 percent said it was
difficult to get good rates for extended stay accommodations.

The HRS “convergence” strategy encourages companies to look
at their accommodations volume more holistically and to engage their lodging
partners—often the bigger chains in this scenario because they have multiple lodging
types in their portfolio—in the entire picture.

HRS has 32 clients who are doing that exercise today, and “it
works,” said HRS VP procurement consulting and supplier solutions for the Americas
Pauline Robin.

“We are able to get stakeholders to come together on our
single platform to work on a project—they are travel managers, meeting
managers, HR. They are all the stakeholders who may have different needs, but
they can fill in our RFP [tool] separately and we as HRS take it back to look
at the requirements.”

By converging the clients’ needs, HRS has been able to
achieve 16 percent off of market rates for meetings lodging, 7 percent off of
transient rates for long-stay journeys and 1.7 percent off of previous
transient rates for new transient rates. In markets where rates have gone sky
high? “It works to mitigate the increases,” said an HRS spokesperson.

The strategy is endorsed by at least one hotel partner—Hyatt
Hotels global sales VP Gus Vonderheide.

“We have 48 clients who work with us this way,” he said. “We
determine those clients through research. They have to be global—on two or more
continents—and they have to deliver a certain amount of revenue. But we don’t
just look at what revenue would be delivered today, we look the potential for the
account as well. We want to grow with these clients and work with them
strategically, so we have to know what their business really looks like, and
they have to know what I’ve got—and where I’ve got it—so we both know the
potential to really [build] the relationship.”

Vonderheide said while Hyatt only has 48 such clients today,
he thinks the hotel company could and should double that number, and for
companies that could—but aren’t willing to—work that way, it’s miss.

“We’ll work with them however they want to work with us, but
if we do the total spend approach, we do work with them differently. We could grow
revenue with more of these relationships, [by taking] marketshare from our
competitors. I’d like to do more.”

New Term, Old Concept, New Life?

According to the GBTA survey, the willingness to breakdown internal
silos and establish consolidated data is the lynchpin for such supplier relationships.
Survey respondents said they generally collaborated with meetings and HR
colleagues, but only a handful had joint processes and workflows that would facilitate
joint sourcing exercises.

While “convergence” may be a new moniker, the idea of
consolidating different types of accommodations volume to leverage program
savings is as old as travel procurement itself. The difference today, said HRS
executives, is the technology that will allow companies to facilitate it.

HRS is working on a booking tool that would bring all these
travel types together to capture that data on the front end, rather than gathering
it through collaborative RFP projects or merging data from different sources.

That offering won’t be ready until next year, though. For
now, Robin said, the company was leaning on a combined hotel stay and long stay
booking tool, while wrapping in small meetings data from the HRS Meetago tool. “We
can do that work on the back end as well, but it will be ideal to have one tool
to consolidate the data capture,” said Robin. “We’re working on that for the first
quarter of 2024.”

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