On April 22, Pegasus welcomed Allison Ahrens of Hospitality Revenue Solutions and Elaine Kennedy, our VP of Hotel Market Planning, to our Virtual Coffee Chats to discuss the state of business travel and business development opportunities that hotels can be taking advantage of right now. Some of our key takeaways:
Domestic business transient travel will be the first to return. Look at industries where there is currently essential travel happening, as well as where there might be pent-up demand.
In addition to hotels that might be housing healthcare workers or first responders, other industries where we’re seeing essential business travel include manufacturing and logistics. Supply chains still need to run, but also many logistics companies are now being called upon to help with office restructuring, relocation and storage as businesses decide to move to a long-term remote working situation.
Government travel is also a segment where we will see a faster rise than other industries. If this is a segment that you hadn’t courted before, you can work with organizations like FedRooms to determine what sort of government travel demand may be coming to your area.
Once travel restrictions begin to loosen, we will likely see a lot of pent-up demand coming from the pharmaceutical and banking industries, where many sales deals need to happen face-to-face. Expect those industries to have more business transient travel at first, as it may be awhile before they feel comfortable booking group meetings or events again.
Some hotels are also finding that there is still demand out there for entertainment and event production. Though many TV shows and movie productions have temporarily stopped, the rise in virtual events means that there are still crews traveling for production setup. Such demand has typically come through calls directly to the hotel and on the website, rather than through GDS channels, so be sure that you have someone knowledgeable answering the phone (or at least a way to forward inquiries), as there will be many questions from potential bookers about new policies at your hotel.
Lastly, use your past data from the last 3-5 years to help you get started finding these sources of business. Perhaps there may have been companies you were working with before that had stopped contracting with you because of a rate change. There may be opportunities here to revisit some of those relationships.
Keep your ear to the ground by working closely with your local travel agent consortia and travel management companies.
In recent years, many corporate travelers were increasingly using online booking tools to manage their business trips, but new duty of care considerations mean that more companies are returning to managed travel. The complexity of traveling in this environment means that having a human expert that can closely manage all aspects of the trip will be critical. In China, for example, where domestic business travel has begun to return in earnest, travel managers are taking many new things into consideration, such as transport, documentation for travel, whether the office location they are visiting has protective equipment, and whether the traveler will need to quarantine coming back.
What this means is that TMCs and consortia, especially local ones, will be the first ones to know about who is traveling and where they’ll be going. Hotels have the opportunity now to build relationships with these organizations, so that they can be top-of-mind when business travel starts moving again. In fact, some of the consortia groups are offering free marketing opportunities for hotels right now to pitch their offerings to travel agents; these include webinars and other advertising opportunities that may have cost thousands of dollars before.
Consortia are also reconsidering their fees for next year’s programs, given that many hotels have already paid huge fees for 2020 but will not be getting the projected volume of business this year. The industry is keen on showing goodwill, and early intel suggests that many programs will be reducing fees by 40% for next year. Hotels can start getting into those negotiations now for savings for next year.
Focus your rate strategy on adding value through increased Duty of Care.
When it comes to corporate rates, there’s a delicate balance happening right now between buyers and suppliers. On the one hand, many companies are coming back to hotels to say that their travel patterns have changed and they would like to renegotiate their contracts. However, hotels also need to remember that the steps that they take to protect the health and safety of guests will also come with additional costs, especially if it means that they have less inventory available or longer room turnarounds due to cleaning. Will the added costs roll up as part of the rate plan, or will it become an added “cleaning fee,” similar to a resort fee? These are strategies revenue managers should start thinking about now. (We’ve listed many other Duty of Care considerations in our recent article.)
Remember, rate reduction will not necessarily be a key driver in contracting. Instead, hotels should have a clear articulation of the added value that they are providing to travelers during these rate negotiations. Past value adds like spa and fitness facilities may no longer be attractive; instead we may see emphasis on amenities like contactless check-in and check-out, in-room fitness, and local private transfers between the hotel and airport or train station.
Accreditation will also become a selling factor as well. Programs such as SG Clean, Accor’s partnership with Bureau Veritas, and Marriott’s Global Cleanliness Council are already setting the stage for accreditation to become commonplace. Hotels should consider working with their local tourism boards and hotel associations to develop and maintain standards at a destination level.
Take advantage of your association memberships to get intel.
Associations such as ACTE and GBTA are great sources to find out recent news and any new snippets of information that are coming in from the business travel world. Many hoteliers may have forgotten that they have attended a conference in the past; attendance often gives you membership into the website, where there are many forums and other free resources such as polls and surveys.
Hospitality Revenue Solutions has provided an additional list of business development resources for corporate travel on their website.
MICE and group travel is going to come back much later, but you can still prepare now.
Many events are going virtual this year, but for the bigger events, there may still be production crews involved with the setup. Hotels may still want to double-check with any regular clients what the plans may be this year, even if the event itself is canceled. There may be opportunities to work with them on their virtual events, such as using your meeting spaces and wifi capabilities to host livestreams.
We are starting to see RFPs go out for events in Q4 and 2021, so be sure that you have your new sales proposition ready and are able to respond promptly and accordingly. If your hotel is closed, you make want to use this downtime to record a virtual tour of your property, so that you have that asset to share with meeting planners that may no longer want to do a site visit.
Training and communication to your sales team are critical.
Take the time to formalize your business transient communication plans. Ensure that your Duty of Care policies are clearly articulated, as well as how your hotel offering will be evolving to meet the needs of today’s business traveler. Work closely with a PR agency to communicate your new value proposition, especially if you’re a luxury property.
Build a training plan for your sales team so that you can bring everyone up to speed quickly, especially if you have team members out on furlough. Teach them how to interpret the intelligence and data that’s coming in through your various sources, train them on the hotel’s new Duty of Care policies, and ensure that they are extremely knowledgeable about your local neighborhood—all this can give your hotel a leg up when working with travel buyers. For example, as part of your new SOP for handling suspected COVID-19 cases, you will want to document the hospital where you are sending sick guests.
Hoteliers should also coordinate training for the frontline staff as well. Get everyone is on the same page about new health and safety procedures, so that when you’re ready to receive these guests, you can ensure a smooth transition to this new guest experience.
Join us on April 29 to talk about the new guest experience.
Interested in participating in our last and final discussion? We will be welcoming Alex Shashou of Alice Platform to discuss how the guest experience is going to evolve post-Covid, how you can still create a high-touch experience without physical contact, and how to get your staff quickly up to speed. For more information, or to sign up, visit our coffee chat page.