As the travel industry begins the journey to post-covid recovery, we have been catching up with innovators in the industry over a cup of “virtual tea” to hear their predictions for the industry and any new innovations their companies are working on.
Switching our focus to hotels we dove into the currently volatile world of hotel rates with TripBAM CEO Steve Reynolds.
PredictX Executive Vice President of Customer Success Maria Chevalier and Steve both drank tea out of TripBAM mugs while Steve reflected on what the pandemic has meant for TripBAM, the travel industry and hotel rates.
In this discussion, Steve shares the following insights:
- Travellers are not always interested in booking the lower rate. TripBAM data says only 25% of people will accept a lower rate if that lower rate is offered at Point of Sale. This is mainly because business travellers are willing to overpay for loyalty points.
- Companies get their static rates, on average, only 60% of the time. Dynamic discounts, while lower, tend to be applied more.
- Switching to dynamic rates can save a third of buyers’ time. Travel managers can spend this time on managing the programme instead of sourcing it.
- In the next 18 months, rates will be more volatile than ever before. Buyers need to use data to monitor their rates and adjust contracts as needed.
- Hotel demand is predicted to rise to only 89% of 2019 levels in the second quarter of 2021. Volumes will not be hitting 2019 levels anytime soon. Video conferencing technology adoption and the budget impact of an economic recession will put a damper on that.
- Not all hotels apply dynamic rates the same way. Not all Best Available Rates (BARs) are the same. Some have a corporate or staggered rate. TripBAM compares the rates you got against what you should have paid with no discount to ensure the discounted rate is still advantageous.
Data plays an essential role in optimising the hotel programme
“I think using data to make sure your hotel programme is trending in the right direction is really important. You could make a couple of changes where you go renegotiate deals and take whatever you can get or just leave it where it is… and then you are kind of blind if you don’t have data to know how that is impacting your spend,” said Steve Reynolds.
Maria agreed, saying that, in light of the pandemic “people are looking to data more than ever before.”
Whether you use static rates, dynamic rates or a hybrid of both, data is critical.
“Even if you accept a static rate you are going to have to use data to see if it’s providing value. If you are going dynamic you need to make sure that the dynamic is getting applied correctly and that the discounts are coming off BAR and that LRA is being accounted for. Where data is going to have the most value going forward is, in a dynamic programme, when you are grading these hotels, to have the confidence that you are making the right decisions and whether you need to shift back. No-one is saying that, if you go dynamic you can’t go static later. All we are saying is that, in a high rate volatility market, which we think we are going to be in for the next two years – if not longer – let’s go dynamic. You will probably like it long term and if things stabilise dramatically and everyone can predict volumes and ADR, then maybe slide back to static if you can get more of a discount. Again, I think data and benchmarking and analytics is really going to give the customer the confidence to make those decisions,” said Reynolds.
Covid-19, while catastrophic, has given TripBAM and PredictX a chance to innovate
“Using Covid-19 as a way to think differently is the silver lining in this for us. Without Covid we may have done things the same, but it has forced us to take a step back and see how we can provide better value. And I think it’s given the travel managers a chance to rethink how they procure hotels. And look, just try something new. The old model is broken. Sitting on your hands for the next year is not going to work. So here is something new to try,” said Reynolds.
Maria is also optimistic, saying that buyers are looking to data more than ever and they need a trusted third-party source. She says PredictX will continue to grow.
Watch Travel Talk with Tea feat. Steve Reynolds on hotel rates
Watch Travel Talk with Tea feat. Steve Reynolds on hotel data
You can listen to Steve Reynold’s conversation as well as our other tea time chats on our podcast.
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