|June 16, 2011|
Corporates Urged To Lock In Hotel Rates Early - FCm Travel Solutions
|Companies looking for the best deal on accommodation are advised to start the hotel contracting process for 2012 as early as possible, according to FCm Travel Solutions.|
While hotel contracting generally takes place from October through to the early months of the new year, higher occupancy at Australian hotels, potential price rises and limited supply of new hotels in Australia in 2012, meant companies should be locking in their rates earlier rather than later.
"Corporates about to head down the path of contract negotiations should be surveying the market now to see what's on offer and which style of hotel pricing will deliver the best outcomes for their travel programs over the mid to long term, " FCm Australia's corporate product manager David Strickland said.
"We are advising all clients with sufficient room night volumes, to start thinking about contract renewals and pricing strategies in July after reviewing their half-year productivity reports, rather than leaving the process until the last quarter of 2011.
"Once hotels start locking in their corporate customers and they get a better idea of what business they can expect for the following year, they may be less inclined to negotiate on rates if their rooms are in high demand."
According to FCm, strengthening market conditions meant hotels may be keen to move corporates with smaller volumes of business, from a fixed rate to discounted BAR (best available rate) rates, a pricing strategy generally known as dynamic pricing where the rate fluctuates according to supply and demand.
Mr Strickland said companies keen to save on their accommodation costs should be focusing on streamlining and consolidating their accommodation programs in preparation for the new season.
"Companies should ensure they are mandating their policies for accommodation. This means checking that travellers are booking hotels that are included as part of a company's preferred hotel program, using the right booking channels and ensuring rate caps are being adhered to," he said.
"Corporates should also be checking they are delivering on their expected room night volume targets with hotels. This will be an area that hotels will be looking at closely and if clients haven't reached their 2011 targets, it could mean hotels may increase prices to make up for lost ground."
The latest findings to come out of a study into the Australian hotel market by Deloitte revealed that occupancy in Australian hotels was set to increase in 2012 in the key business hubs of Sydney, Melbourne, Brisbane, Perth and Darwin. Deloittes has also tipped a hotel rate rise in Melbourne, Brisbane, Perth, Adelaide, Canberra, and Darwin.
FCm recommends companies starting the hotel contracting process:
- review their 2011 year to date (YTD) hotel production reports and ensure hotel volume commitments are being met
- look for leakage in their hotel program and identify reasons for booking outside of policy
- review their travel policy in regards to hotel bookings.
- commence their 2012 hotel negotiations in July/August to get in early
- Ask your FCm account manager about best practices for hotel contracting