Hotel Procurement: Adapt Product Bundles to “New Normal”

Corporations are recalibrating their travel programs for post-coronavirus business activities. Dealing with the “new normal” has created different needs by corporations and travelers towards hotels, which lead to changed product bundles and pricing.

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As the globe emerges from the pandemic, corporations are recalibrating their managed travel programs and priorities for post-coronavirus business activities. Dealing with the “new normal” has created different needs and expectations by corporations and travelers towards hotels, which lead to changed product bundles and pricing.

Product bundles from the pre-COVID-19 era must be reevaluated and adapted

The HRS White Paper “Procurement Strategies In Covid-19 Times” highlights that companies mainly focus on two topics in adapting their desired product bundles: increased flexibility with T&Cs (88%) and enhanced hygiene protocols (86%).

The survey shows that travelers will simply expect that negotiated rates include hygiene kits as well as high flexibility on cancellation policies. Increasing investments into personnel, touchless elements, COVID-19 related hygiene measures and the increased need for higher cancelation flexibility might influence rates into becoming more expensive. While properties that adopt minimal legal hygiene measures may not add to the price point, other properties that try to differentiate themselves by offering high-end hygiene practices are more likely to increase rates.

To address these baseline requirements, hotels should engage with universal programs, such as the HRS Clean & Safe Protocol, which provide labels that showcase the hotel’s newly enhanced standard in both procurement and shopping processes. Moreover, HRS enables its affiliated hotel partners to offer their guests a completely touchless stay: starting with digital check-in through to contactless payment and billing after the stay.

Breakfast buffets are now relegated to the past

On the other hand, changed rate packages will also be reflected in lower rates. For example, due to new health guidelines, breakfast buffets are now relegated to the past. Many companies have the cost of breakfast included into their rate as part of their legacy contracts. This cost can be reduced, cut or modified, depending on the changed travel policies of corporations. The HRS survey highlights that the companies now prefer take-away breakfast for their travelers.

An analysis of required Last Room Availability destinations is critical

Also, as a result of lower occupancy, Last Room Availability (LRA) options no longer make sense for buyers to pay extra for in all destinations. By leveraging the HRS database – the most extensive benchmarking database in the industry – the surcharge of an LRA rate in comparison to NLRA was analyzed in detail. The results showed that for the top 100 business travel destinations, the average LRA surcharge on the rate was 10% in 2019. A thorough analysis of required destinations and the anticipated pace of occupancy increases in those locations should take place when readjusting the corporate program to the “next normal.”

To learn more, download the HRS White Paper Procurement Strategies In Covid-19 Time.

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