Fulfilling duty of care, saving costs — almost all companies will have to tackle these challenges once business travel resumes. But how do global companies operating within the complex lodging ecosystem maintain an overview of both their travelers and their costs? What role does data play in optimizing hotel programs? And why is it that these two challenges can only be overcome when businesses place their trust in a centralized platform solution?
Why Companies Can No Longer Ignore Centralized Platform Solutions
The outbreak of the COVID-19 pandemic has affected economies worldwide. The global demand shock came just as fast as the airplanes were grounded. According to the International Monetary Fund (IMF), global economic performance is set to fall by 3% in 2020, and by a staggering 7.5% in the eurozone. Many companies have come under pressure and have been forced to take drastic austerity measures. And one industry is left asking, “Will business travel as we knew it actually still exist?”
Nobody is sure what stage will be reached and when, but recent surveys show that decision makers want to send their teams back on the road. The crux is that in-person contact is essential in developing sustainable business relationships; perhaps now more than ever. Business trips will soon be resumed on a regular basis, but under completely new conditions.
The highest priority of any company must now be to satisfy their duty of care towards employees and in doing so, reduce their liabilities. Of course, on the one hand, this means adhering to safety and hygiene initiatives, yet the entire industry is faced with one fundamental challenge: restoring trust in travel. Although the onus here is on hotels, of course, companies can also do their part by creating an appropriate hotel program that defines the prerequisites for contactless travel, thus tackling one of the major challenges in the corporate travel sector: leakage, i.e. booking hotels outside of the managed channels.
So, how is it that companies ultimately only control 16% of their hotel spend? Quite simply, they cannot control what they cannot measure. Only 40% of business travelers are booking through the managed channel at the negotiated rate. Nevertheless, in this program, 17% of rates are incorrect (other bundles as negotiated, more expensive etc.). And that is why companies are faced with a problem, especially during COVID-19: their new company priorities of fulfilling duty of care towards employees and significantly reducing costs are utterly impossible to achieve when they have no control over their hotel program.
The Fragmented Lodging Ecosystem as a Potential Cause
One reason why this challenge even exists is the fragmentation of the hotel market. Although only 16% of hotels globally are run by chains, they account for 75% of the membership of corporate hotel programs. Independent hotels, which make up the remaining 84%, do not make it into the programs via the conventional route of a global distribution system (GDS) — a market situation that understandably also impacts the pricing policy of large hotels.
The second cause for a lack of control over hotel programs is that the lodging sector consists of a highly complex ecosystem. Powerful hotel chains use their loyalty programs to solicit corporate travelers outside of hotel programs, then there are the traditional travel agents, online travel agents (OTA), online booking tools (OBT), travel management companies (TMC), and the aforementioned global distribution systems. There is a plethora of service providers for procurement, and the same goes for corporate travel payment and settlement. In short, the market is fragmented and there is no transparency at all. This leads to high transaction costs and isolated systems, which provide data but fail to connect the dots.
Companies must therefore aim to simplify all their processes relating to business travel, from procurement and booking through to payment and account settlement. Many global companies such as Siemens and Amazon switched to centralized end-to-end solutions a long time ago. The reason is remarkably simple: while other companies work with various providers, a platform solution means the individual solutions and their respective data streams are all interconnected. Companies not only benefit from data optimization at each touchpoint, but also from innovation within the hotel program.
The Clean & Safe Protocol Sets New Standard for Hygiene
HRS launched the innovative Clean & Safe Protocol shortly after the outbreak of the coronavirus pandemic. This protocol is groundbreaking for the hotel industry, and was introduced in collaboration with SGS (Société Générale de Surveillance S.A.), one of the world’s largest inspection, verification, testing and certification companies. It provides both companies and hoteliers with clearly defined standards at a time when cleanliness and building hygiene are among the most important booking criteria. According to a survey, 86% of travel decision makers prefer accommodations with revised hygiene standards. Hotels that meet the criteria receive a label to demonstrate their commitment, making them the preferred choice for travelers.
Since safety and hygiene are now the new drivers for encouraging employees to stay within the hotel program, companies should start to lay the foundations for a touchless traveler experience. Digital, flexible, contactless, and seamless — these are the new keywords that travel managers must keep in mind when considering the satisfaction of their travelers. In doing so, companies not only fulfill their duty of care; they also increase the adoption of their program, which they can then optimize.
Digital Payment Solutions Save Time, Hassle, and Money
The key to success is a digital payment solution that provides several benefits in one go. First of all, it renders checking in and checking out at reception unnecessary: travelers book a hotel then check in and out again online, all without having to come into contact with front-of-house staff. This approach is in line with the latest hygiene requirements, while also saving time and hassle — not just for travelers. And, since the hotel invoice is sent via email, it can easily be imported into an expense report tool, reducing accounting costs, and automatically triggering a sales tax rebate for international trips.
An analysis of the data shows that the savings for companies are immense: concrete cost savings can be made through a 23% higher adoption rate and an optimized sales tax refund process, which increases on average by 40%. This is in addition to indirect cost savings by saving 21 minutes per stay for both travelers and accounting staff combined.
Continuous Procurement Based on Real-Time Data
The data gained through a continuous feedback loop from the payment solution to the end-to-end platform, which enables the program to be optimized, is just as important as the direct and indirect savings. Payment, booking, and invoice data can be used to create new models that have the potential to be integral to planned procurement processes.
In an ideal scenario, companies also benefit from real-time data when comparing rates. Instead of using one single algorithm, intelligent solutions execute multiple data models simultaneously during the procurement process and incorporate a large number of factors into the analysis, such as long-term rate development, short-term local events, other companies’ rates, as well as travelers’ search and booking data. It takes mere seconds to identify market-specific patterns, examine data and scenarios, discard irrelevant data points, and interpret results. This guarantees the optimum level of benchmarking and helps both sides of the equation. Instead of wasting time on elaborate RFP processes, hotels can work on improving their rates, which in turn benefits companies.
Platform Operators are the Link Between Companies and Hotels
Market data, behavioral data, process data — all of this data needs to be collected and analyzed to ultimately develop a decision engine based on real-time data. The key point is that the data is automatically used to optimize the hotel program. The platform evaluates each byte it receives and uses machine learning to ensure that it continuously and independently optimizes itself.
But the right platform operator also goes one step further, by configuring the data so that it improves the efficiency of internal processes at the same time. Intuitive dashboards are used by companies as a basis for decision-making, to draw the right conclusions with regard to optimization. After all, what use is there in having valuable data streams if they are not interconnected so they reduce costs, guarantee a duty of care towards travelers, and finally, hone internal processes at the same time?
Ultimately, this is the basic formula for a fruitful collaboration between hotels and companies; for both to be winners, they must understand the power of data and use it to their advantage. And this can only be achieved by working with a partner who connects both sides of the equation through end-to-end solutions. With the help of cloud-based big data analysis and machine learning, hotel spend, booking behavior, and lodging patterns can be investigated and used to determine the necessary steps. Sourcing, booking, and paying are all processes that provide data, which companies can and should use in the interest of travelers.