Hotel Insights

The hotel industry will change as a result of COVID-19; however, this doesn’t mean you can’t or shouldn’t work on your program

COVID-19 and Managed Hotel Programs

The hotel industry has changed due to COVID-19 and as a result, your strategy for your managed hotel program needs to as well. Gone are the days of having only global coverage and savings as your main priorities. When it comes to management of your hotel commodity you now need to add health and safety risk and duty of care to that list. So while there is little to no travel occurring, you have a lot to incorporate into your hotel program to make sure it’s ready when travel comes back.

The Impact on Global Hotel Chains

It doesn’t help that the hotel chains have been hit hard by COVID-19. All are operating with hundreds of property closures and reduced staff both on the property and within their global HQ teams that centrally support corporate accounts. However, if you still have travelers on the road, we’ve been assured that all global chains have a firm commitment to support travel-related special needs and emergencies. Corporate travel managers can work with their TMC, as well as their global chain contacts, to both confirm operations and find suitable replacement hotels as the need arises.

Outside of imminent travel, the ability for a hotel chain to support standard operational requests varies. Some chains have told us they are still able to process client RFP requests as normal. Others have taken a more conservative approach and are only processing if the request involves immediate travel and some have suspended those activities all-together.

All of the major chains have also announced various programs and protocols for how their chain is addressing cleanliness and safety in a standard way. Learn more about how hotels are implementing new and improved cleanliness and hygiene processes in BCD Travel's last What You Need To Know report here.

In response to the annual RFP cycle and the renewal – or rollover of 2020 static rates – below is a summary of what chains have indicated they will be offering their clients:

Rolling over current negotiated static and dynamic rates for another 12 months

For the rollover static rates, some chains (not all) are also dual loading a discount off BAR, but in no cases is the discount ever as high as the dynamically priced properties

Limiting or preventing the ability to renew existing rates or add new properties to preferred programs working with central account teams

Continuation of blackout date removal and loosening of cancellation policies

Marketing their chainwide health, cleanliness and safety protocols and standards to which all properties within the chain are expected to adhere

Here are a few recommendations we have for travel managers at this time:

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Rollover rates. Dynamic rates were designed to be rolled over from one year to the next so accepting this is recommended. Static rates, however, should not be rolled over unless they are accompanied by an appropriate dual loaded discount off BAR. If this is not being offered, we recommend declining the static rollover rate, deprioritizing working with that chain for the interim and removing the preferred designation from those properties in your online booking tools.

Dual Loading discounts off BAR for Static Rates. When static rollover rates are accompanied by a discount off BAR we recommend accepting the offer when the discount being offered is at least as high as your highest dynamically priced property. This is suitable pricing for the interim until pricing can be renegotiated. If the discount being offered is not that high, we recommend declining the rate, deprioritize working with that chain for the interim and removing the preferred designation from those properties in your online booking tools.

Limiting or Preventing centrally supported negotiations. While this may seem like a hard stance for the chains to be taking, we believe it is reasonable to a degree. While not widely known, all chains will have an exception process available for negotiation of properties receiving significant room nights. If you have strong self-awareness of what constitutes a significant amount of room nights, you will be successful in working with your chain representative. Also, in the event you do not have a chain representative or the chain does not have the resources to support a negotiation centrally, you always have the option to contact the hotel directly.

Blackout date and cancellation policies. By continuing to remove blackout dates and maintain more flexible cancellation policies, your travelers will receive maximum availability and flexibility.

Health, cleanliness & safety. These programs are being actively marketed and it’s logical to assume that hotels take these protocols seriously. But companies are responsible for ensuring a certain degree of safety is provided to employees traveling on company business. As such, travel managers need to align with their internal HR, Risk, Legal and Finance counterparts to determine what the company-approved policy will be with respect to travel. As part of this process, certifying the cleanliness practices of your top hotels may be deemed a prudent activity.

Our overarching recommendation has remained the same since the start of COVID-19: implement Rate Targets.

They will provide guidance to travelers regardless of what your future travel levels end up being, what offers you receive from the chains or your ability to renegotiate rates before travel starts to resume. Regardless of what preferred properties you have in your program moving forward, Rate Targets are a basic component you can implement to guide your travelers to make smart buying decisions.

As the situation has unfolded we have developed agile strategies to help travel managers tackle hotel programs. We know sourcing has traditionally been one of the biggest components of a managed hotel program. But that is changing, and we believe the companies that don’t see that and continue to operate traditionally will fail. Hotel availability has never been more compromised, so you cannot depend on them to do what they have done in the past. Instead, you need to focus on the activities you can take to drive savings – activities within your booking tools and in how you communicate with your travelers.

To get started, read our 5-part blog series where we lay out this new framework for managing hotel programs.

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