COST AND CHOICE
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MICRO-HOTEL , MACRO INFUSION
Premium queen room at Yotel Boston
COST AND CHOICE
According to an August study by HRS of 100 corporate travel managers around the world : steer their businesses to hotels with more flexible policies ,” Neufang says .
With corporate travel buyers embarking on the 2018 RFP process , ACTE ’ s Koch says , waiving the fees could become a negotiable like free breakfast . Companies seeking flexibility will probably get further in price negotiations than those simply looking for a blanket exception , he says .
“ Certainly we respect the right for hotels to be able to make money and not let inventory perish just before they can actually sell it ,” says Neufang , who advises corporate buyers to come to the negotiating table knowing their own cancellation rate data . “ We ’ re going to have to go through a couple of seasons of this before we see what has really changed .”
WAYS FORWARD Koch ’ s advice to hoteliers : Give people options . That could mean “ rate buckets ” – one for leisure travelers booking well in advance , a higher one for travelers who need last-minute flexibility . “ The
• 17 % of corporate hotel bookings are canceled , but only 5 % are canceled within 48 hours of arrival
• 59 % of travel managers expect increasing costs due to the new policies ; 32 % would insist on exceptions to the policy ; 15 % would restrict travelers from booking rooms at properties with the stricter policies
• Given a choice between two similar hotels , 82 % of travel managers would strongly prefer the one offering flexible cancellation
airline model has shown that customers will pay for that ,” he says , and optics matter to customers .
Look for unintended consequences , Neufang says . Corporate travelers energize lobby spaces and spend money on meeting rooms and in the bar . “ If this was an experiment , then don ' t be afraid to pull back on it , at least for the corporate travel market , where there are some good checkbooks but also some long memories ,” she says .
Tweaking cancellation policies aren ’ t the only fix : CHMWarnick ’ s Crandell says the reward redemption program needs work . Hotels that discount inventory to hit an occupancy percentage to trigger higher compensation would be better served with tiered redemption rates that don ’ t ding ADR so badly .
Hotel companies have “ played with all the marketing tools to influence customer reward behavior , but they really haven ’ t materially changed the redemption policies for the hotels on the ownership side ,” he says .
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The cancellation policy change is “ a non-event from our perspective ,” says Steve Reynolds , CEO of TripBam , which tracks and re-books hotel reservations when it finds a cheaper rate . “ The real value in the 48-hour cancellation is to avoid last-minute , distressed inventory that gets dumped on the OTAs . I think that ’ s more the key strategy than to stick it to corporates or anything like that ,” he says . “ If you can convince ( hotels ), look , I ’ m IBM , and we ’ re never going to stay in your hotel again if you don ’ t waive ( the cancellation fee ), they ’ ll keep waiving it . That ’ s not the primary mission .” “ It ’ s just added more complexity ,” he adds . “ And that ’ s where we really provide value … We love that stuff .”
MICRO-HOTEL , MACRO INFUSION
Starwood Capital Group ’ s 30 % interest in Yotel , totaling US $ 250 million , will goose the micro-hotel brand ’ s sluggish development pace .
“ Yotel has operated somewhat under the radar ,” says Cody Bradshaw , Starwood ’ s managing director and head of European hotels , adding that it ’ s often confused with pod or capsule hotels . “ Hopefully that is about to change .”
Yotel , with 15 hotels at various stages of development , is focusing on Europe , North America and Asia , targeting 50 to 60 hotels in the next five years . Properties in Edinburgh , Glasgow and Amsterdam are expected to open as Yotels by 2019 . “ We are … providing Yotel access to growth capital where Starwood will own 100 % of the real estate in its global opportunity fund ,” Bradshaw says .
November 2017 hotelsmag . com 11