natm hotel sourcing workshop 20100420 bestanden/natm_hotel_sourcing... · microsoft powerpoint -...
TRANSCRIPT
3
Develop clear picture of
today’s program
Assessment
Analyticalchallenges
Quantify options to base
confident decisions
Strategy
Strategicchallenges
Optimize program to save
money & time
RFP Process & Negotiation
Negotiationchallenges
Pro-active and sustainable
management
Monitor &Improve
Managementchallenges
Comprehensive Process Overview
Implementation
Build solid foundation for
program improvements
Implementationchallenges
Implement
4
Existing hotel program
Data analysis multiple sources
Recommendations solicitation list and strategy
Compliance, Benchmarking & Gap Analysis
The assessment phase is crucial in the hotel sourcing process. Multiple data sources help forming the basis
Market Dynamics
5
Hotel Rate Developments Year over Year
Country ADR Last 12 Months
-2%
-3%-3%
-6%
-8%
-9%
-11%-12%
-13%
-10%-11% -11%
-9% -9%
-8%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
AD
R D
evel
opm
ent (
Y-o-
Y)
0
20
40
60
80
100
120
140
160
Mon
thly
AD
R (L
ocal
Cur
renc
y)
Source: Advito 2010 Industry Forecast Q1 Update, March 2010
Country ADR Last 12 Months
-1%-2%
-7%
-5%
-9%
-4%
-14%-15%
-10%-9% -9%
-11%
-5%-7%
-1%
-18%
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
AD
R D
evel
opm
ent (
Y-o-
Y)
0
20
40
60
80
100
120
140
160
Mon
thly
AD
R (L
ocal
Cur
renc
y)
Country ADR Last 12 Months
-3%
0%
3%
-3%-5%
-6%
-14%
-7%-8%
-3%
-6%
-13%
-7%
-4%
-8%
-16%-14%-12%-10%-8%-6%
-4%-2%0%2%4%
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
AD
R D
evel
opm
ent (
Y-o-
Y)
0
20
40
60
80
100
120
140
Mon
thly
AD
R (L
ocal
Cur
renc
y)
UK
Germany USA
Country ADR Last 12 Months
23%
32%
27%29%
16% 18%
5% 4%
20%
8%3%
-11% -12%-14% -13%
-20%
-10%
0%
10%
20%
30%
40%
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr
-09
May
-09
Jun-
09
Jul-0
9
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
AD
R D
evel
opm
ent (
Y-o-
Y)
0
50
100
150
200
250
300
Mon
thly
AD
R (L
ocal
Cur
renc
y)
Brazil
6
Hotel ADR Predictions for 2010
Forecast of average development of hotel rates used by corporate clients in 2010 against 2009 (local currency)
AR +4.8%
US -2.0%
DE -2.3%UK -2.2% RU ±0%
CN -4.5%
AU -0.8%
JP +0.3%
SG -4.8%
AE –3.0%IN -4.5%MX +3.6%
CA +0.6%
NG+8.7%
ZA +4.3%
Year-over-year development in average daily rates for corporates will be less radical than in the first half of 2009
FR -1.6%
BR +6.0%
FI -1.6%
ES -4.0%
Source: Advito 2010 Industry Forecast Q1 Update, March 2010
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Tier Distribution
Interestingly, there was no major shift in hotel tiers – the premium segments have even gained share
Tier Distribution
4.0%
3.8%
4.0%
47.5%
46.3%
47.7%
11.4%
11.4%
11.1%
33.9%
34.7%
33.5%
1.7%
1.7%
1.8%
0% 20% 40% 60% 80% 100%
2009
2008
2007
% of Room Nights
Luxury Upper Upscale Upscale Mid Scale Economy Mixed Source: Advito 2010 Industry Forecast Q1 Update, March 2010
8
Tier Developments
One of the reasons might be that the premium for the luxury tier against other tiers has declined
Source: Advito 2010 Industry Forecast Q1 Update, March 2010
Premium/Discounts of Other Tiers Against Upper Upscale
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
Jul-0
8
Aug-
08
Sep-
08
Oct
-08
Nov
-08
Dec
-08
Jan-
09
Feb-
09
Mar
-09
Apr-
09
May
-09
Jun-
09
Jul-0
9
Aug-
09
Sep-
09
Oct
-09
Nov
-09
Dec
-09
Luxury Upper Upscale Upscale Midscale Economy
9
Project business case
Scenario analysis
RFP preparation
Supplier service evaluation
Quantify options to base
confident decisions
Strategy
Marketchallenges
Comprehensive Process Overview (Strategy)
Develop clear picture of
today’s program
Assessment
Analyticalchallenges
Build solid foundation for
program improvements
Implementationchallenges
Implement
Optimize program to save
money & time
RFP Process& Negotiation
Strategicchallenges
Pro-active and sustainable
management
Monitor & Improve
Managementchallenges
10
What our clients talking about and focusing on for 2010 and 2011
High Speed Internet
Global account offers
CSR
Location
Breakfast
LRA vs NLRA
Safety
Meetings
Dynamic Pricing
Additionally for 2011
11
What are we asking? What are the hotels getting?
Source: Advito
Must have…0% increaseLRAInclusive internet
Would like to have…Priority to hotels that include breakfastNegotiated rate is also applicable for group bookings <25 rooms
15.000 room nightsHotel program reducing to 12 preferred hotels92% compliance to preferredAverage 3,5 nights stayTargeted communications to avoid Tue/Wed travelEncouraged use of preferred for meetingsMandated policyMandated travel agency / booking tool usage
Launch a RFP or launch a non-RFP?
12
The non-RFP turned out to deliver better results thaninitially requested
move away from the traditional “RFP” process with the aim of creating an efficient win-win for you and the hotelsGuarantee a place on the hotel programAcceptance into the program before RFP is launched
Hotel / market knowledge - exampleADR up 5.0% (3 years of increase)RevPar up 4.8% (4 years of increase)YTD Occupancy 71.0% (-0.2%)2008 supply = 1,055,349 rooms2008 demand = 748,930 rooms
Source: STR Global
Benefits
What?
How?
Focus on top destinations onlyShow market knowledge!Webinar per destination Contact onsite sales
Better negotiation results in volume hotelsTime savings for hotels and youPartnership with hotels
13
Optimize program to save
money & time
Proposal evaluation
Benchmarking
RFP Process& Negotiation
Strategicchallenges
Comprehensive Process Overview (Negotiation)
Solicitation
RFP management
Negotiation
Develop clear picture of
today’s program
Assessment
Analyticalchallenges
Quantify options to base
confident decisions
Strategy
Marketchallenges
Pro-active and sustainable
management
Monitor & Improve
Managementchallenges
Build solid foundation for
program improvements
Implementationchallenges
Implement
14
Mapping helps in the decision making process of both the solicitation list and the final selections
Plots client-specific hotels on a city mapProximity to locationDistance from airportNegotiated ratesHistorical rates Benchmark ratesTarget rates
www.hotelbymaps.com
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Total Cost of Stay – Lodging Savings Approach
Rising travel costs call for the evaluation of the total cost of stay with a focus on savings across all components of the lodging costs
16
Selection and decision criteria are crucial in a efficient hotel sourcing process
Selection Criteria Hotel Program WeightLast Room Availability (LRA) Mandatory
Rates loaded in GDS Mandatory
Cancellation policy 4 pm on day of arrival Mandatory
Rates are non commissionable Mandatory
Free High Speed Internet Access (HSIA) Secondary 40%
Free breakfast Secondary 30%
Free transportation to local office Secondary 15%
Free airport transportation Secondary 15%
Others…..
By applying target rates and selection criteria you can provide a quantitative basis for comparing hotel offers
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Comprehensive Process Overview (Implement)
Implement
Implementationchallenges
Build solid foundation for
program improvements
Business ROI review
Online Hotel Directory
Travel Policy update
Rate audit
Change Management
Develop clear picture of
today’s program
Assessment
Analyticalchallenges
Quantify options to base
confident decisions
Strategize
Marketchallenges
Optimize program to save
money & time
RFP Process& Negotiate
Strategicchallenges
Pro-active and sustainable
management
Monitor & Improve
Managementchallenges
18
In the Implementation Phase the rate audit is crucial
On average, American businesses
$11.35were overcharged by nightly
12%varied by over their negotiated rates
$1.8 millionoverpaid by daily
Advito rate loading audit results 2010 RFP’s
Audit 1 Audit 2
56 % loaded 70% loaded12% not loaded 6% not loaded32% discrepancy 24% discrepancy
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Dynamic Pricing will change the hotel sourcing process and strategies
Hotel industry is following airline industrySince the 2009 RFP process included in NBTA standardBAR rates are proven to be successfulGlobal Discount programs already in place with larger global chainsHilton and IHG are front runners
Flexible corporate rate
Fixed corporate rate
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Dynamic Pricing is a Pricing Model where a flexible corporate rate – based on a negotiated
discount % off a baseline rate – replaces the fixed corporate negotiated rate.
Definition of Dynamic Pricing
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GPP - Global Partnership Program (Marriott)
Corporate Gold Agreement (IHG)
GAO - Global Account Offer (Accor)
Chain Wide Discount (Hilton)
…..
A negotiable discount percentage off BAR or other baseline rate for all chain hotels not included in the net negotiated program
Key Facts
• 6% – 20% discount• BAR is usually the baseline rate• Non-binding commitments• Total hotel chain directory is
offered
Dynamic Pricing already exists todayGlobal Discount Programs
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4.000Accor
1.000Starwood
16.000Total
3.200Marriott
4.400IHG
3.400
Total Number of Hotels
Hilton
By ChainYou can save 6 - 20% on allyour non compliant business with the contracted chains
Your program expands with thousands of additional hotels
All hotels included in the chain wide program will loaded under your 3-letter rate access code in GDS
The objective is to increase coverage in secondary markets with limited time investment
Chain wide discount programs bring savings but can also undermine your preferred hotel program
24
Example BAR versus Corporate Rate
€ 10
€ 30
€ 50
€ 70
€ 90
€ 110
€ 130
€ 150
Sun Mon Tue Wed Thu Fri Sat
Fixed Corporate BAR Dynamic Corp Rate
Advito recommends to make a business case with the hotel chains before implementing dynamic pricing
The next step is that your fixed corporate rates will be replaced by dynamic corporate rates
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Dynamic Pricing cannot be stopped, but most importantly corporate clients are not ready for it yet
Simplifying the hotel sourcing process (RFP): time savingsFixed discount on BAR: a “continuous” LRA rate No discussions about your corporate rate being higher than the BAR
For corporates
Optimization of revenues by optimal yield management: reduces displacementSimplifying the hotel sourcing processTime savings in processing and loading corporate rates
For hotels
Difficulties in budgeting
No influence on ceiling rate
Many uncertainties about the benefits
For corporates
Slow acceptance of corporate clientsHigh investments due to adjustments in booking- and data management systems Difficulties in proving the financial benefits to corporate clients
For hotels
Advantages Disadvantages
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• Hybrid model• Negotiated Program• Dynamic pricing for secondary
markets• Chain Wide Discount Program
• Create a business case based on historical BAR development of the hotel versus average stay patterns of your travelers
• Days of the week• Months of the year• Compliance to corporate
negotiated rate• Market share
Recommendations
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Bas VissersManager Consulting EMEA
E [email protected] Europalaan 400T +31 (0)20 56 21 825 P.O. Box 5035M +31 (0)6 22 80 97 10 3502 JA UtrechtF +31 (0)20 71 88 168 The Netherlands
www.advito.com
Bas VissersManager Consulting EMEA
E [email protected] Europalaan 400T +31 (0)20 56 21 825 P.O. Box 5035M +31 (0)6 22 80 97 10 3502 JA UtrechtF +31 (0)20 71 88 168 The Netherlands
www.advito.com
Questions?
1-daagse Hotel Inkoop Training
Donderdag 9 september 2010Schiphol
1-daagse Air Inkoop Training
Donderdag 7 oktober 2010Schiphol