Hotel consolidation: 4 strategies for navigating the changing market

January 8, 2016 Donna Brokowski

 

Hotel consolidation: 4 key strategies for navigating the changing hotel market

Corporate travel buyers have had a lot to absorb due to the mergers and acquisitions in the lodging market. Corporate travel buyers are being confronted with questions from travelers like:

“Will I be able to keep my points?”
“Will I keep my status?”

Corporate travel buyers are asking themselves questions like:

“What brands will they keep?”
“What brands will be sold off?”
“Who will buy those brands?”
“Will they raise their rates?”

hotel-consolidation-pullquote-1Consolidation is not new to travel, but these acquisitions are likely to change the lodging landscape in a significant way.
Corporate travel buyers will need to watch the industry carefully.

Remember, there is an inherent difference in hotel consolidation vs. consolidation within other travel categories. While the brands are consolidated, individual hotels are still measured on their own merit – at a P&L level. This makes change more methodical. With that said, travel buyers should still prepare for contingencies on changes that may have substantial impact on current year expected savings and future years’ savings expectations.

There are four core strategies we recommend:
1. Communicate with your lodging representatives. Be available for hotel’s requests for meetings and calls. During acquisition, parties on both sides of the table can get distracted with rumors and speculation. The best way to ensure that you are briefed on developments is to maintain open, honest and consistent dialogue with your representatives.

2. Know the terms of your agreement. Most corporate agreements are non-binding in nature. Confirm that you are addressing hotels in your primary markets with clauses that ensure full year pricing regardless of brand change. Renegotiate mid-year if needed.

3. Plan for more time in the RFP process. If brand changes do occur due to this acquisition, ensure that you allow for time to analyze your preferred hotel portfolio, a longer negotiation process, and rate loading and auditing (especially if there is a merge of central reservation office support). Be sure to understand if the companies you are working with require travelers to go direct to achieve specific benefits (i.e. Wi-Fi, rates, etc) and know the overall cost and implications to the company (lost data, duty of care).

4. Make contingency plans for your primary locations. If pricing and/or other terms do become unfavorable, consider alternatives. Yes, more brands and hotels may give a newly aggregated lodging company leverage in size in corporate travel, but the leverage can swing to the buyer once you influence your travelers. Know about all new brands and new builds as they come into your primary markets. There are a number of upper midscale brands that have recently launched or are being launched soon by previously considered economy brand companies. If other brands come to you, listen. Review them. They might be an option.

​There are several decisions still to be made in these acquisitions. One thing is absolute in the months and years to come – more change will happen in the lodging sector. The recommendations above will prepare corporate buyers for navigating these changes and help to set them up for future success.

Donna Brokowski is General Manager of Travel and Transport’s Partner Solutions Group

The post Hotel consolidation: 4 strategies for navigating the changing market appeared first on Travel and Transport.

 

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