Setting Up a Corporate Lodging Program
Covid-19 Update: Lodging Dynamics Favor Buyers With Grip on Demand
Researchers and procurement specialists predict lodging rates will fluctuate for the remainder of 2020 but remain lower than they were in 2019. To capture existing demand, hotels are expected to offer attractive rates for the upcoming request or proposal season. Industry projections show lodging demand and revenue per available room to fall short of pre-pandemic levels until 2023.
Buyers likely will have a compliance advantage for the remainder of 2020 and going into 2021. They'll be supported by senior stakeholders on their desire to increase influence on travel decisions. Travelers also may see value in keeping travel managers informed about their whereabouts and may be more receptive to program parameters. As a result, buyers will be in a stronger position to shift volume to preferred hotels. This will add to their negotiation power.
Still, most buyers are largely uncertain of when and how much of their travel volume will return, so to capitalize on their stronger position, they will have to maintain strong dialogue with travelers and leadership to understand their true demand environment.
Some buyers are wondering whether to source hotels formally for 2021. Some may extend current agreements through next year, defer the sourcing process and/or adopt dynamic discounts instead of fixed rates. Others may want to renegotiate with key partners for new fixed rates but with more flexible terms. Each of these tactics will operate in an ecosystem that is experiencing depressed travel demand, limited inventory and drastically reduced hotel staff.
If buyers roll pre-pandemic rates into 2021, it could undermine attachment and compliance to preferred hotels as travelers find lower rates on hotel websites or online travel agencies. If buyers opt for a dynamic rate strategy, they will need to audit booked rates against market rates. More suppliers are now offering these services.