Demand for hotel rooms will continue to outstrip supply
The American Express 2008 Asia Pacific Corporate Hotel Rate Projections and Market Forecast released in Sydney today reports that demand for hotel rooms will continue to outstrip supply forcing up the
corporate negotiated rates in all major cities around the region.
In addition to the rate projections, the analysis by American Express Consulting, a division within Global Commercial Card, highlights the emergence of several new trends that will impact on a corporation's
ability to manage its hotel spend.
Firstly, a new generation of travellers are stimulating the supply of new types of rooms and new styles of hotels. Secondly, corporate social
responsibility policies are starting to influence buying decisions, and finally the movement of hotel pricing practices from static to dynamic models.
"Travel Managers and Procurement professionals will continue to face many challenges when managing hotel expenses, however there are steps companies can take to enhance their negotiating position," said Prashant
Aggarwal, head of American Express Consulting, Japan, Asia Pacific and Australia.
"When preparing for negotiations with hotels, companies must collate as much information as possible to ensure discussions are based on fact.
get access to transactional level data which can be overlaid with data from the travel management company, the hotel and general ledger," said Aggarwal.
"Travelling employees should be given the opportunity to provide input before a travel policy and preferred hotel supplier list is finalised. Finally, a
corporate travel policy must be clear and succinct and well communicated by senior management.
instances of non-compliance,
India - 2008 Hotel Rate Projections
-Influences and Drivers highlights:
Bangalore: occupancy rates stable at around 70%, poor city infrastructure, supply to increase dramatically
Mumbai: Normal occupancy for Mumbai is 75-80%, imminent new supply near commercial centre, major initiatives to develop city into international
metropolis, top-tier occupancy declined sharply to 65% following the bombing in July 2006, this is expected to be short lived.
Other 2008 Trends to Watch
Managing New Demand the 'New Room' Traveller demands are increasing and include the full spectrum of modern technologies and lifestyle options from wireless internet access to health services.
This has introduced a wider range of innovative accommodation styles including:
Cabin style: approximately 10 square metre cabins with convertible sofa beds and free internet access.
Express style: lodging only at a highly competitive rate
Boutique guest houses: intimate accommodation with personalised services and facilities.
Serviced apartments: designed for short term stays with home-like amenities
employees to conduct business most effectively and then review the preferred list of hotels to ensure their services align with these needs."
Managing Non-Product Corporate Social Responsibility
Customers are increasingly considering a supplier's corporate social responsibility practices and hotels are responding positively to this.
and using pollution free fuel are being adopted by many hotel chains.
"The trend to include CSR questions into the request for proposals is definitely increasing and hotels that accommodate this are going to end up winning favour," said Mr Aggarwal.
Managing Inventory Dynamic New Pricing
Hotels are increasingly introducing dynamic pricing models because it increases their competitiveness and flexibility and allows them to increase occupancy without sacrificing their rate integrity. The price is determined according to forecast demand, market intelligence and available room supply.
they remain reluctant to move away from fixed or static pricing because of the challenges presented by dynamic pricing which include:
Measurement: historical data is required so room rates can be matched against the figure a client would have paid using the static model
Budgeting: a buyer should measure historical booking patterns and source intelligence that details market conditions in order to budget based on calculated assumptions.
"While it does present challenges, dynamic pricing also offers certain advantages to buyers including greater access to rooms and potential savings as the hotel responds to peaks and troughs.
determine whether it could work in its financial favour. The key to success is having robust historical data and expert intelligence on anticipated
market conditions," concluded Mr Aggarwal.