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Hotel survey report from BottomLine group

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BottomLine Group conducted a study to determine how business travel managers were using various hotel program strategies. The resulting report contains many interesting findings – some surprising. For example, mandating travel policies is still more the exception than the rule, and over one third of respondents are not auditing GDS-loaded rates after negotiations. Read the report for more details and insights. Also, 45% of responding companies use three or more data sources to understand hotel spend, while only 15% use TMC data only.

The hotel industry is ever-changing, and we hope that this latest research will assist you in fine-tuning your hotel strategy of the future.

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Hotel survey report from BottomLine group

  1. 1. © Copyright 2016. BottomLine Group. All rights reserved. [Date of Presentation] Prepared by [name] [contact information (optional)] CONFIDENTIAL © Copyright 2016. BottomLine Group. All rights reserved. Corporate Hotel Strategy Survey Report 2016 Research Report
  2. 2. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Table of Contents 2 • Executive Summary • Approach and Methodology • Respondent Profiles • Results by Key Management Area • Strategy • Corporate Travel Policy • Program Goals • Open Booking Confidence • Program Effectiveness • Long-Term Stay • Other Strategies • Sourcing • Sourcing Process • Data Sources Used • Sourcing Time Invested • Other Sourcing Tactics • Optimization • Hotel Bookings by Channel • Payment Capture • Performing Rate Audits • Spend Under Contract • Compliance to Travel Policy • About BottomLine Group
  3. 3. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved.  Mandating travel policies is still more the exception than the rule. Given the focus on duty of care and actual savings in large corporations, it is surprising that only 24% of respondent travel policies are mandated.  Traveler safety is a top concern. Traveler safety edged out program savings for the top-rated goal in the study.  Effectiveness (self-assessed) of travel programs is lower than expected. The average score of all respondents was 7.5 out of 10, indicating that travel managers are aware of the need for improvements.  External support for hotel sourcing is used by 53% of respondents. Given the complexities and time involved in sourcing a hotel program, travel managers are leveraging third party resources more often to ensure their program delivers value and meets the needs of all stakeholders.  Almost all (85%) respondents use multiple sources of data to understand historic patterns and to project future hotel spend. The most common mix of data sources used is Travel/Card/Hotel Chain Data.  Dynamic rates are leveraged as part of the program for 41% of the respondents. Dynamic rates appear to have a place within large programs, most commonly used in high-demand markets to supplement the preferred hotels.  Compliance to preferred hotels and to the payment method continues to be a challenge. “Rogue” travel spending (either using a non-preferred property or not booking through the TMC) is significant at 27%.  Over 1/3 of respondents are not auditing GDS-loaded rates after negotiations. A disciplined rate audit plan ensures negotiated results can be booked by travelers.  Compliance to travel policy is monitored primarily using passive methods. Post-trip out of policy reporting is the most frequent compliance management method used. 3 The latest research study from BottomLine Group explores key elements of corporate travel management: Strategy, Sourcing and Optimization STRATEGY SOURCING OPTIMIZATION Executive Summary
  4. 4. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Approach & Methodology  The target audience of the survey was North American corporations with large, established travel programs. Industries represented in the survey results include: Financial Services, Manufacturing, Pharmaceutical/Health Care, Professional Services/Consulting, Retail & Wholesale Trade, Technology, Telecom, Utilities and Other.  The study was conducted in two parts. In phase one, respondents completed an online survey. Phase two consisted of telephone interviews with the majority of survey respondents, in an effort to validate key indicators and to gain further insights.  Respondents were assured anonymity and did not receive any financial compensation for participating in the survey.  47 corporate travel practitioners participated in the study. 4 The BottomLine Group conducted a research study on corporate travel management to establish new benchmarks and to identify best practices in a number of areas, including travel policy and hotel program management.
  5. 5. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. • 34% of respondents employ more than 50,000 employees. • 68% of respondents are responsible for global management of the Transient Hotel/Travel Program. • Of the 68% with global responsibility, 55% are responsible for the global hotel program without the support of regional travel managers. 13% have support from the regions. Respondent Profiles 5 Size of Organization Key Highlights Scope of Responsibility Hotel Transient Spend - Annual ($MM USD) <9,999 employees, 34% 10,000- 24,999 employees, 19% 25,000- 49,999 employees, 13% 50,000- 99,999 employees, 13% 100,000 + employees, 21% Global Responsibility; No Regional Support, 55% Global Responsibility with Regional Support, 13% North America Responsibility, 17% Other, 15% The majority of the 47 respondents lead large, globally managed hotel programs. < $10 30% $10-$30 38% $30-$50 9% $50-$100 6% > $100 17%
  6. 6. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Corporate Travel Policy 6 [CELLRAN GE] [CELLRAN GE] [CELLRAN GE] Mandated Recommended Guidelines Per Diem Guidelines CORPORATE TRAVEL POLICY - LEVEL OF MANDATING % of respondents KEY OBSERVATIONS Which of the following statements best describes your corporate culture as it relates to business transient hotel spend in your travel policy? 1. Only 24% have a culture with a mandated hotel travel policy. 2. Mandated policy usage scales with size: 50% of large corporations mandate (100,000+ employees) and 19% of smaller corporations mandate (<9,999 employees). 3. A mandated policy is most common (33% of respondents) in these industries: Manufacturing, Retail/Wholesale Trade, Telecom, Utilities. 4. Survey results indicate that 43% have a multi-tier travel policy (different policies for tier of VP’s, business units, etc.). The degree of autonomy or control in a travel policy is driven by the company’ s culture. Best Practice is a mandated minimum policy globally, with regional or business unit level discretion to tighten the policy. Question BLG Perspective STRATEGY
  7. 7. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Program Goals 7 [CELLRAN GE] [CELLRAN GE] [CELLRAN GE] [CELLRAN GE] [CELLRAN GE] Compliance Traveler Satisfaction Contracted/ Sourced Savings Actual Savings Traveler Safety PROGRAM GOALS % Respondents Ranking this Goal as #1 From your vantage point, which of the following hotel program goals are most important to your organization? 1. Traveler Safety is the number one concern among survey respondents. 2. This is consistent across all organizations with >25,000 employees. • Companies with 10,000-24,999 employees rank sourced savings highest • Companies with <9,999 employees rank actual savings highest 3. Industries that ranked Actual Savings as the #1 goal over Traveler Safety: Pharma/HealthCare, Manufacturing, Telecom 4. Professional Services industry ranks Traveler Satisfaction as the highest. STRATEGY Question KEY OBSERVATIONS Elements to foster traveler safety include selection of the right hotels, access to booked data for knowledge of traveler locations, and easy access to communicate with travelers when needed. Best Practice is to select properly vetted business hotels. Ensure travelers book through approved methods which provide location visibility before and during trip. BLG Perspective
  8. 8. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Open Booking Confidence 8 How confident are you that your hotel program is delivering material value relative to an "open booking” environment? 9% 45% 21% 4% 21% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Extremely Confident Very Confident Somewhat Confident Not Confident Don't know KEY OBSERVATIONS 1. 46% of respondents are not fully confident that preferred hotel programs are delivering value versus “open booking”. 2. In follow-up discussions, we learned: • Most respondents do not allow open booking of hotels and believe their negotiated rates are more competitive. • Travel managers believe preferred rates are better overall, but do not have explicit evidence. The challenge is that there is limited quantitative data on this. • In instances when lower rates are found on the open market, travel managers have found that they can include rate restrictions. CONFIDENCE THAT RATES ARE BETTER THAN OPEN BOOKING % of respondents STRATEGY Question If Open Booking is used as a strategy, peer benchmarking of rates by hotel and market should occur to validate the impact. Two additional studies conducted by BLG have shown that there is 7-12% premium paid with open bookings. Best Practice is to maintain preferred rates for high-volume properties and markets. BLG Perspective
  9. 9. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Program Effectiveness 9 How would you assess the overall effectiveness of your hotel program? (Scale of 1-10; 10 is best) 0% 4% 9% 72% 15% 0% 10% 20% 30% 40% 50% 60% 70% 80% 1-2 3-4 5-6 7-8 9-10 1. Average self-assessed effectiveness score is 7.5 out of 10. 2. Overall, travel management staff believe they are effective and delivering value, but still see some room for improvement. 3. The main improvement area cited was to manage and monitor the program more closely during the year. STRATEGY Question Best Practice: Regular benchmarking will provide greater confidence in program strength or confirm areas that could benefit from improvement measures. PROGRAM EFFECTIVENESS Ratings by % of respondents KEY OBSERVATIONS
  10. 10. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Long-Term Stay 10 66% 34% 0% 10% 20% 30% 40% 50% 60% 70% Leverage long-term stay spend as part of transient sourcing process Run a separate sourcing event How are long-term stay requirements managed within your organization’s hotel sourcing process? 1. The majority of respondents incorporate their long-term stay needs in their transient sourcing process. 2. About one-third of respondents will run a separate sourcing event for their long-term needs. STRATEGY Question Best Practice: If there is significant recurring demand in specific regions, a focused long-term stay RFP can result in lower pricing. However, most companies can use the extended stay module within a standard transient RFP to address their long- term needs. KEY OBSERVATIONSLONG TERM STAY SOURCING % of respondents
  11. 11. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Other Strategies 11 Do you use rate caps? 53% KEY OBSERVATIONS Respondents use hotel rate caps for cities with high demand and for markets lacking preferred coverage. Best Practice: Rate caps are most valuable in volatile/high demand markets or to cover regions where there is low preferred coverage. Do you use city or country per diems? 26% Only 26% of respondents use per diems in their travel programs, restricting travelers to use a specific daily allowance on lodging. Best Practice: Per diems can be effective tools for keeping expenses down, or to provide traveler guidance when booking in areas not included in the hotel directory. RESULT Does new employee orientation process include travel policy? 60% 40% of companies do not introduce new employees to the travel policy. Best Practice: Every new employee should be introduced to the travel policy. Best companies require written acceptance from each employee. Yes STRATEGY Question
  12. 12. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Sourcing Process 12 HOTEL SOURCING PROCESS % of respondents 1. Survey results show that 53% of respondents use some outside help to execute and negotiate the annual hotel program. Description of Options: • In-house: Hotel program entirely managed by in-house staff. Global/Regional Travel Manager(s) negotiate directly with hotels. • Third party: Travel Manager uses a third party (consultancy or TMC) to negotiate rates and run the process. • Combination approach: Travel Manager still executes part or most of the process. A third party is used for some or all of the process. Which of the following best describes your organization’s hotel sourcing process? In-House 47% Third Party 33% Combination 20% SOURCING Question KEY OBSERVATIONS Third party firms have experience consolidating multiple data sources (TMC, supplier and credit card) to build the solicitation list, access to robust benchmarking data, and proven negotiating abilities. Best Practice companies use third party resources to leverage their expert advice, tackle data consolidation needs, secure incremental savings, build strategies for improvement, and gain efficiencies in the overall process. BLG Perspective
  13. 13. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Data Sources Used 13 KEY OBSERVATIONS 1. TMC Data is used by 94% of respondents. 2. Hotel Reports are the second most widely used (72%) data source. 94% 72% 60% 38% TMC Data Hotel Reports (from chain /property) Credit Card Data Expense Management Tool(s) Which of the following data sources are used to support your organization’s global hotel sourcing and on-going optimization? What combination of data sources are used? KEY OBSERVATIONS 1. TMC data is the only source used on its own, by only 15% of those surveyed. The most common combinations are TMC/Card/Hotel (24%) and TMC/Card/Hotel/Expense (21%). 2. The usage of data sources is quite varied. Much of this is due to the quality of each data source, and the capability to quickly aggregate the sources. % OF RESPONDENTS USING EACH DATA COMBINATION 15% 0% 6% 15% 2% 24% 6% 11% 21% 0% 5% 10% 15% 20% 25% 30% SOURCING Questions DATA SOURCES LEVERAGED % of Respondents TMC data alone is not enough to determine hotel spend. Survey results indicated that 73% of bookings go through the agency, so on average, 27% of spend is not accounted for in the TMC data. Failing to consolidate all available data sources can lead to missed opportunities and decreased negotiation leverage. Best Practice is to aggregate TMC and Card spend at a minimum. BLG Perspective
  14. 14. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Sourcing Time Invested 14 34% 58% 6% 2% 0-3 months 4-6 months 7-9 months More than 12 months How many months does it typically take to complete a business transient hotel sourcing engagement? (Kick-off to hotel rates available for booking)Q: KEY OBSERVATIONS 1. The majority of respondents take 4-6 months to complete a hotel program. 2. With 53% of respondents leveraging outside resources (see earlier metric), it is evident that there is a need in the marketplace for support in moving the process along swiftly. Most companies do not have the bandwidth to put the right amount of focus on the hotel program for several months. Question Hotel sourcing is a time-consuming process influenced by: number of properties, number of data sources used, and desire for incremental savings (which drives deeper effort). Best Practice is to complete the sourcing within four months. Leading up to this sourcing phase, it is important to revisit the hotel strategy. Key questions are: Has our strategy changed? Did we source the right hotels last year? Did we include the right cities? Is our policy aligned with our objectives? BLG Perspective SOURCING
  15. 15. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Other Sourcing Tactics 15 Do you negotiate chain- wide discounts? KEY OBSERVATIONS 87% of companies surveyed benefit from chain-wide discounts. Best Practice is for clients to supplement their preferred programs with chain-wide discounts in markets where volume is not large enough to warrant a negotiated rate. Do you have dynamic rates (i.e., % off BAR) with one or more preferred properties? RESULT 87% When used, average dynamic discount is 25.5% off BAR. Use of dynamic rates is skewed towards smaller firms (50% usage for <9,999 employees, only 30% for >100,000 employees). Of those with dynamic rates, 68% of respondents have dynamic rates in 10-20% of preferred hotels, only a portion of their programs. Best Practice: Dynamic rates are selectively used by clients to offer additional options in high demand markets. 41% Do you profile spend by day of week during negotiations? Only 28% of companies surveyed analyze day of week metrics for use in negotiations. Best Practice: Day of week analysis can be useful to share with hotels, especially when stay patterns are attractive to hotels to fill non-peak nights. 28% SOURCING Questions Yes
  16. 16. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Hotel Bookings by Channel 16 What percentage of your organization’s transient hotel spend is booked through the following channels? KEY OBSERVATIONS 1. On average, 73% of hotel bookings are made via the TMC. 2. This results in 27% that are booked directly with the hotel or through ‘other’ channels. 3. Of those bookings via the TMC, 65% are booked through an Online Booking Tool (OBT) versus an agent. 27% 73% Other (hotel direct, consumer website, etc.) Travel Management Company (on-line or offline bookings) 65% 35% On-line Offline BOOKED THOUGH TMC VS. OTHER % of transactions TMC ONLY – ONLINE VS OFFLINE % of transactions OPTIMIZATION Question It is critical to include non-agency data sources to improve spend visibility. Additionally, increasing bookings through the agency aligns with a company’s objectives to focus on traveler safety and security. Best Practice is to promote or enforce bookings through the travel agency. BLG Perspective
  17. 17. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Payment Capture 17 What percentage of your organization’s business transient hotel stays are paid for through the following forms of payment: corporate cards, personal cards or other? KEY OBSERVATIONS 1. Only 50% of respondents have a corporate card policy well implemented (>90% of spend). 2. Larger corporations are more successful mandating corporate cards. Respondents with over 80% capture have twice the hotel spend of other respondents. 3. Only 13% of respondents with >50% of transient spend allow expenses to be paid using a personal credit card (with reimbursements). 0% 20% 40% 60% 0% - 19% 20% - 39% 40% - 59% 60% - 79% 80% - 89% 90% - 100% % OF HOTEL SPEND PAID FOR USING A CORPORATE CARD Question %ofspendonCard % of respondents Since not all hotels are booked through the approved agency, corporate card adoption and data capture is key for understanding the complete picture of hotel spend. This also simplifies expense reporting. Best Practice is to mandate the use of a corporate card for all travel spend. OPTIMIZATION BLG Perspective
  18. 18. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Performing Rate Audits 18 Do you conduct a GDS rate audit of your preferred properties during the year? [CELLRAN GE] [CELLRAN GE] [CELLRAN GE] Yes No Don't Know GDS RATE AUDITS CONDUCTED POST-SOURCING % of respondents KEY OBSERVATIONS 1. The survey shows that 35% of respondents do not perform any audits of negotiated rates. 2. Of the 61% that conducted rate audits, respondents estimated that 20% of rates were found to be incorrect in the first rate audit. 3. Of those that conducted a first rate audit and took corrective action, 9% of rates on average were still found to be incorrect in the second rate audit. OPTIMIZATION Question Hotels or chains have the responsibility of loading rates into the Global Distribution Systems (GDS). The hotel rate audit is the tool used to test negotiated rates to ensure they are accurate and available to be booked. Quarterly rate audits are recommended to ensure correct rates remain loaded throughout all seasons. Best Practice is to conduct at least two rate audits after the sourcing process has ended. BLG Perspective
  19. 19. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Spend Under Contract 19 KEY OBSERVATIONS 1. Average spend under contract (compliance) to preferred properties is 73%. Note 1: ‘Under contract' refers to spend in cities with negotiated rates at preferred hotels as well as discounts from chain-wide or brand-specific agreements 73% Average 0 10 20 30 40 50 60 70 80 90 100 Each Survey Respondent What percentage of your organization’s business transient hotel spend is under contract1 with preferred properties? How often is hotel spend under contract versus spend with non-contracted suppliers reviewed? 17% 35% 24% 7% 2% 4% 11% 0% 5% 10% 15% 20% 25% 30% 35% 40% KEY OBSERVATIONS 1. Most respondents perform some sort of spend review, but 48% of respondents are not monitoring compliance during the course of the program year. OPTIMIZATION Question Best Practice: 100% is not realistic program-wide. However, top markets should be operating at a level of 90% or higher. These are markets that travelers frequent often and should be well aware of preferred options. Best Practice: Review hotel compliance quarterly, looking for high volume non-preferred hotels or non-preferred cities that need to be addressed. This type of analysis also helps to prepare for hotel chain review meetings. 48%
  20. 20. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. Compliance to Travel Policy 20 Which of the following activities does your organization use to maximize travel policy compliance as it relates to hotel bookings? (Select all that apply) [CELLRANG E] [CELLRANG E] [CELLRANG E] [CELLRANG E] 0 5 10 15 20 25 30 35 40 Post-Trip Exception Emails None / Not Available Pre-Trip Authorization Out of Policy Reporting MAXIMIZING TRAVEL COMPLIANCE METHODS % of respondents KEY OBSERVATIONS 1. According to the survey, the majority of compliance actions are reactive, not proactive. All mandated policies involve at least one compliance approach. 2. Travel managers should be aware of rogue spending that occurs and look for measures to reign this in. 3. The average response was 63% to the following survey question: “Please indicate the percentage of bookings wherein the average booked rate is the same as or below the contracted (negotiated) rate”. This indicates that 37% of rates are booked higher than the preferred rates. Question Best Practice is to incorporate pre-trip exception-based audits to look for high rates, or non-preferred hotel bookings in a city with a preferred hotel, or overnight air without a hotel booking. Monitoring reports and educating travelers is key to improving hotel compliance. BLG Perspective OPTIMIZATION
  21. 21. © Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. 21 AboutBottomLine Group An independent North American based consultancy focused on helping clients manage expenses Extensive travel knowledge + objective, consultative approach Hotel Sourcing & Optimization Assessment Sourcing and Negotiations Benchmarking Optimization and Supplier Management Airline Sourcing & Supplier Management Assessment Sourcing and Negotiation Benchmarking Optimization Travel Strategy & Policy Travel Program and Category Strategy Travel and Meetings Policy TMC Sourcing & Contract Management Performance Audit Online Tool Review Strategic Sourcing We advise clients primarily in the following areas: For more information on this report or BottomLine Group please contact: Al Norman, Director Al.Norman@bottomlineconsulting.com 416-804-8050 Home Office: Toronto, ON, Canada Associates also located in: Vancouver, BC, Canada Waterloo, ON, Canada Los Angeles, CA, USA Philadelphia, PA, USA Richmond, VA, USA