Hotel Sourcing As COVID-19 Evolves; Q&A with Philipp Morawietz, HRS SVP of Sourcing Solutions

In Blog by Ulrike

Philipp Morawietz is the Senior Vice President of Sourcing Solutions for HRS. He was named to this role in January 2020, after serving in multiple management and senior strategy roles since joining HRS in 2012. Mr. Morawietz is based at HRS headquarters in Cologne, Germany.

Philipp_Morawietz

Q: The coronavirus outbreak in the first quarter of 2020 has dramatically disrupted the managed travel industry. What guidance do you have for corporates as they navigate this unforeseen territory?

First and foremost…make sure the traveling workforce is safe. Companies should follow their duty of care guidelines, and enhance them given new learnings from the challenging past few months.
With many programs dramatically cutting travel, we encourage programs to begin the process of recalibrating their lodging program for the second half of 2020. Such steps could include re-prioritizing select destinations and choices to add more hotels with upgraded hygiene protocols. Recalibration could also include examining the entirety of the lodging process – what works well today, what could be enhanced, etc.
On the sourcing front, buyers should be open to shorter negotiation cycles with hotels when business travel begins to rebound. Hotels are likely to be quite flexible with rates and terms, especially in the near term. Continuous sourcing is likely to yield savings with properties eager to win corporate volume as the “new normal” comes into view. In secondary destinations, buyers may have a path to savings by bundling their anticipated volume with other entities.

Q: Is this really a good time for programs to negotiate with hotels? Should travel procurement leaders let rates roll over into 2021, as some in the industry have proposed?

The past few months have been shocking to corporate hospitality, with too many of our friends and family impacted by the coronavirus, and too many of our industry peers furloughed or laid off. While resources are minimal at hotels, corporations with projected volume for 2020 can still engage and lay the groundwork for new agreements that reflect the “new normal” we’re all transitioning to.
It’s important to note that virtually all business are dealing with lost revenue due to the global economic shutdown. As a result, most companies have reduced their travel budgets for the balance of the year. These elements put travel procurement leaders in a position they have not been in for years. It’s critical that corporate travel buyers assert themselves and engage with hotel suppliers on new agreements. Failing to do so is risking the reputation of managed travel as an institution, and puts the role in question within every corporate hierarchy. Furthermore, hotel suppliers won’t respect individual buyers or the profession as well, which has longer-term negative ramifications.
Beyond the obvious tasks of budgeting and reporting to executives, program leaders also must consider the mindset of the savvy employee traveler. As we’ve seen in other recoveries this century (9/11, SARS), aggressive online travel agencies (OTAs) gain market share by undercutting outdated negotiated corporate rates. It’s vital that managers promoting their managed travel channels for safety reasons have the best rates in those channels as well, as it directly impacts the integrity of the program across the company. Nobody wants to bring back the days of travelers and admins parading to the travel manager’s office, constantly asking about the lower rate they found for their upcoming trip on an OTA.
HRS clients agree. Nearly two-thirds of HRS clients (62 percent) responding to a May 2020 survey see savings opportunities with hotels, with 51 percent planning to take steps to negotiate lower rates in the months ahead.

Q: Hotels have seen their occupancy rates fall sharply due to the coronavirus outbreak. What is HRS seeing from the supply side of the managed lodging industry?

It’s clearly a challenging time for hoteliers, as it is for the entire managed travel ecosystem. We appreciate the difficult times they are having due to the outbreak.
While hotels remain confident that business travel will indeed rebound, as it has in the past from SARS and other pandemics, the focus now is on making it to the recovery stage. In the meantime, they are getting creative with newly defined rate offerings. For example, with more nations requiring 14-day quarantines for travelers incoming from virus-impacted countries, hoteliers are designing rate and service packages to appeal to the security and safety needs of travelers making these kinds of journeys.
In China, hotels are deploying “room service robots” to deliver meals and other items to quarantined guests. This creative use of technology is likely to make its way to other continents this year, and be a selling point that hoteliers emphasize.
For now, corporate hotel sales leaders are staying engaged with clients, ensuring they remain in the conversation for the moment in time – hopefully soon – when business travel begins to return.

Q: With a new decade underway, what are the most important trends in hotel sourcing from your vantage point?

It’s clear that the acquisition and transparent use of data drives the practice. More refined use of data – shopping data, booked data, payment data – feeds insights that inform corporate sourcing strategies. More recently, availability data has delivered newfound detail regarding how often negotiated rates are found in preferred shopping channels. These benefits go beyond simple transient bookings; companies are leveraging more data for extended stay and meetings-related volume.
In recent years, new rate auditing and filtering technologies have shed new light on the preponderance of inaccurate rates in the shopping channels used by travelers and admins. Rates are wrong as much as 25% of the time, costing companies an average of 14% more on each booking. With corporates having more insight on these errors, hoteliers have increasingly stepped up their game with preferred corporate clients, ensuring that negotiated rates are available and present in all shopping channels, even to the extent of offering defined allotments to their top customers.
Even with new technologies impacting sourcing every year, the value of having on-the-ground hotel experts in the world’s top business city centers is exponentially important. HRS’ unmatched team of 500+ local experts around the world will be particularly important as managed travel begins to rebound from the coronavirus pandemic.