Corporates Seek TMC Advise to Bed Down Tighter Policies

With the key indicators of growth in the global hotel industry including rates and occupancy increasing, companies have been focusing on consolidation, travel policy and procedures to save on accommodation costs.

According to FCm Travel Solutions, organisations have been working more closely with their travel management companies (TMCs) and preferred hotel suppliers to streamline their accommodation programs and optimise hotel spend.

Changes to client hotel programs in the latter half of 2010 have been in response to rebounding conditions in the hotel sector as detailed by a recent STR Global report, which shows hotels in most world markets are performing strongly on the back of higher consumer demand.

STR Global’s report for November 2010 shows occupancy across the Americas had risen by 8.8%, while average daily rates had increased by 2.7% (during November); in Asia Pacific occupancy had risen by 2.8% and average daily rates had spiked by 12% (year-on-year results) and in the Middle East and Africa occupancy was up 2.4%, while average daily rates increased by 3.1% (during November).

STR said the European hotel industry posted mostly strong results in November 2010 with the largest year-on-year rise in occupancy in Istanbul with an increase of 18.1% followed by Vienna 15.2% and Prague (15%). Zurich experienced the largest average daily rate increase of 25.8% with Munich close behind at 24.6%.

FCm’s global and client hotel program general manager, Joe McCormack said that during the 2011 hotel contracting period in the second half of last year, companies were enforcing tighter travel policies and procedures to contain costs on hotel expenditure and correct non- compliant traveller behaviour.

Mr McCormack said also that as a result of rebounding market conditions, hotels had been reviewing client rates to ensure contracted room nights were being delivered.

“FCm has been helping companies with contracted hotel rates analyse their hotel expenditure and traveller buying behaviour to prevent out of policy bookings and leakage of room nights to properties that may not be preferred,” he said. “Companies also have been working closely with their FCm account managers to analyse travel spend data as a way of identifying where additional savings or cost reductions could be made ... As part of these trends we have seen companies reigning in the number of hotels their staff have been staying at, introducing tighter procedures around bookings and approval processes as well as more outsourcing of supplier negotiations to TMCs as a way of creating greater in-house resource efficiencies for company procurement staff.”

Mr McCormack said that while most corporates had finalised their hotel programs for 2011, in the next 12 months he expected to see companies continue to focus on procedure, policy and consolidation with their preferred hotel suppliers. Enforcing tighter policies will also be used as a way of reinforcing traveller safety and security.

“The changing global economic landscape and steady return of business travel volumes will create greater demand for accommodation, which will affect hotel occupancy, availability and rates,” Mr McCormack said. “In this kind of environment strategic travel management from a TMC with a global platform of hotel product, ability to benchmark hotel programs and strong relations with suppliers will become even more important for long term costs savings.”

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