Yapta this month rolled out its RoomIQ hotel rate assurance product, claiming that in beta it saved clients $109 per stay. Like TripBam’s, the service beats rates for existing reservations and alerts travelers or their agents to the rebooking opportunity. Clients can calculate agency processing fees into rate comparisons. Both firms charge transaction fees, while TripBam offers the option of charging a percentage of accepted savings.
Meanwhile, WorldMate last year added Price Alerts and Counter Offers to its mobile itinerary and hotel booking app. The service notifies users of cheaper rates based on their itineraries. They can touch a couple times to cancel the original reservation and book a new one through WorldMate’s Expedia affiliation. WorldMate vice president Ian Berman said he could envision a managed version incorporating policies and preferred suppliers in CWT’s To Go app.
The CEOs of TripBam and Yapta said they’ve never heard “no” from a prospective corporate client. Why wouldn’t you want to plug and play some hotel savings?
Let’s just say there’s no such thing as a no-brainer. Here are some considerations.
Will travelers accept a new hotel, or only a new rate at the same hotel?
The surest thing in rate assurance is a lower price where the traveler already booked. He or she may need to take no action. Widespread adoption could prompt hotels to react (see next question), but otherwise why wouldn’t you? At the moment, Yapta searches for better rates only at the already-booked hotel. TripBam does that but can also shop in clusters defined by the client. The savings opportunity is greater, but shopping other hotels has pitfalls.
“They may have a good reason for having picked the hotel they did. Maybe they’re staying with clients. Hotel is very emotional and very personal to people,” said Hitachi Data Systems global travel and meetings director Denise Adleman. “Overall I do support tools and processes to help manage preferred hotel usage. It’s just painful at times.”
“One of our clients asked, ‘How do we know our travelers haven’t already reviewed these properties and rejected them?’ ” said Tower Travel Management president John Smith. “We don’t know that. But it provides additional information we can report to them for audit or policy compliance purposes.”
The savings are much greater if the traveler will switch hotels. According to TripBam’s 2014 data, shopping within a cluster of preferred and non-preferred hotels generates $120 in average savings per stay. When it’s the same hotel and room type, the average is $40.
TripBam claims users accept lower rates for the same hotel and room type every time. When clients use a cluster of both preferred and non-preferred properties, travelers accept one in five offers. With those wider search parameters, TripBam finds a cheaper rate on 50 percent of bookings; within only the same hotel and room type, the figure drops to 5 percent.
Anthem Inc. uses TripBam to look for better rates only at the already-booked hotel, said director of travel and events Cindy Heston. Bookings by executives are not sent to TripBam. Nor are bookings at preferred properties in top markets, as these might include free WiFi, parking, breakfast or commissions.
If you do use TripBam to shop beyond the same hotel, as Sapient does, “You have think about how you want it to be programmed and how you want it to present offers,” said the company’s director of global travel and client experience Michelle DeCosta. “Travelers need to understand they’re going to get these offers. Most people think it’s spam, even though we have communicated about it.”
It certainly seems too good to be true. Sapient is saving $174 per booking on average, DeCosta said.
“We see a lot of feedback from travelers,” said TripBam CEO Steve Reynolds. “You know, ‘How dare you recommend a different hotel!?’ The primary drivers of that are convenience, perception issues, loyalty … but there’s never a good excuse. Some of our clients almost mandate that the traveler takes the savings; for others, it’s just a suggestion.”
“There is no doubt that hotel spend is the largest opportunity for savings in a managed travel program; the question is whether there is a corporate appetite for additional steps in the booking process,” according to Partnership Travel Consulting’s Andrew Menkes. “I would tend to believe that at the C-level if the numbers validate the savings potential, then the traveler will be made to understand that the hotel that they booked may not be where they are ultimately sleeping. It’s a far easier sell to leave the property the same, and improve on the rate and/or the amenities.”
Is there an impact on relationships with preferred hotels?
It’s not hard to imagine hoteliers asking clients what’s going on if suddenly they’re getting less revenue but the same number of room nights. Still, it seems like a risk worth taking.
Purveyors say their tools can instead support preferred relationships. “Companies with preferred hotels can chose to only include these hotels in clusters and only apply clusters if the traveler is booked at a non-preferred hotel,” said Reynolds. “The tool can be used to improve compliance as much as cost savings. We have one client that has improved preferred property usage by more than 20 percent.”
Yapta plans to offer a cluster concept, in part to help clients move business from non-preferred to preferred hotels.
Might the hotels try to stop this yield erosion?
Chartres Lodging Group EVP Maxine Taylor called these models “horrid” for hoteliers.
Some lodging firms have been fiddling with their cancellation rules. These changes haven’t hurt Yapta and TripBam but a cancellation fee would. Reynolds thinks that would alienate the corporate market and that hotels instead will “get better in yield management.”
WorldMate’s Berman said the company hasn’t heard grief from hoteliers about the rebooking approach, but “once it starts proliferating they may knock on our door a little bit. It could redefine winners and losers.” WorldMate’s parent company is Carlson Companies, which owns Radisson and several other hotel brands.
Can travel departments do this themselves?
The concept of using booking reports or an auditing firm to review hotel bookings up to the day before the trip isn’t new.
Some travel pros do their own post-booking shopping, including the on-site agents at Meritor. “We track ‘surplus savings’ and share the reward by paying a percentage of savings to the agency we contract with,” said global travel manager Jack Reynaert. “We show value in service and savings, reducing cost and reinforcing why it is mandatory to secure travel arrangements via our department. We never are challenged with ‘I found it cheaper online.’ ”
SAS employs its own agents in an ARC-accredited Corporate Travel Department. “We are not constantly checking all reservations repeatedly,” according to travel operations director Richard Clowes. “I understand some people have annoyed the GDSs with that tactic. We allow for the agent to ‘waitlist’ a hotel and/or keep ‘price checking’ a hotel. Then we use GDSX to run scheduled processes to check the latest. It’s been very useful. In our case presently the agent makes a conscious decision to turn it on. As long as the vendors do these pricing fluctuations then there will be a need for some automation to handle their ‘games.’ We remain pawns in the chess game and we just look to find creative solutions to stay competitive.”
Reynolds questioned the capability of human agents to do what his automation does: “There’s not enough labor in the world to do manually what we do. Asking an agent to shop every day for every booking across a cluster of only preferred properties and chains filtering out all non-flexible rates then sending an email to the traveler (if it’s not like-for-like) for approval would take a very large army.”
Yapta CEO James Filsinger agreed that it can’t be done effectively.
Are the compared rates comparable?
A $120 rate that includes breakfast and parking may be better than a $100 rate without them.
TripBam will “review the hotel segment, rate description, room description, ‘other service information’ lines, rate codes, etc., to determine what is included,” said Reynolds. “Since we’re not using just the GDS for shopping, the information is lot cleaner for us so we can make accurate rate offers.” TripBam uses Pegasus Solutions to shop.
According to Filsinger, Yapta’s RoomIQ “shows our customers side-by-side rate comparisons so they can visually see the rate-level differences between the current booking and any savings opportunity. This allows customers to see potential amenity changes — gains or losses — and to make more informed decisions about changing rates.”
Is there real savings in hotel rate assurance?
Yes. But travel managers may need to take into account that their TMCs will charge something to support such programs, whether a transaction fee or share of the savings. Reynolds said it takes an average of three to five minutes for an agent to update a booking record with a new hotel. He has suggested TMCs consider using an offshore rate desk to keep a lid on costs.