Hotel survey report from BottomLine group

© Copyright 2016. BottomLine Group. All rights reserved.
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© Copyright 2016. BottomLine Group. All rights reserved.
Corporate Hotel Strategy
Survey Report
2016 Research Report

© Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved.
Table of
Contents
2
• Executive Summary
• Approach and Methodology
• Respondent Profiles
• Results by Key Management Area
• Strategy
• Corporate Travel Policy
• Program Goals
• Open Booking Confidence
• Program Effectiveness
• Long-Term Stay
• Other Strategies
• Sourcing
• Sourcing Process
• Data Sources Used
• Sourcing Time Invested
• Other Sourcing Tactics
• Optimization
• Hotel Bookings by Channel
• Payment Capture
• Performing Rate Audits
• Spend Under Contract
• Compliance to Travel Policy
• About BottomLine Group

 Mandating travel policies is still more the exception than the rule. Given the focus on duty of care and actual savings in large
corporations, it is surprising that only 24% of respondent travel policies are mandated.
 Traveler safety is a top concern. Traveler safety edged out program savings for the top-rated goal in the study.
 Effectiveness (self-assessed) of travel programs is lower than expected. The average score of all respondents was 7.5 out of 10,
indicating that travel managers are aware of the need for improvements.
 External support for hotel sourcing is used by 53% of respondents. Given the complexities and time involved in sourcing a hotel
program, travel managers are leveraging third party resources more often to ensure their program delivers value and meets the needs
of all stakeholders.
 Almost all (85%) respondents use multiple sources of data to understand historic patterns and to project future hotel spend. The
most common mix of data sources used is Travel/Card/Hotel Chain Data.
 Dynamic rates are leveraged as part of the program for 41% of the respondents. Dynamic rates appear to have a place within
large programs, most commonly used in high-demand markets to supplement the preferred hotels.
 Compliance to preferred hotels and to the payment method continues to be a challenge. “Rogue” travel spending (either using
a non-preferred property or not booking through the TMC) is significant at 27%.
 Over 1/3 of respondents are not auditing GDS-loaded rates after negotiations. A disciplined rate audit plan ensures negotiated
results can be booked by travelers.
 Compliance to travel policy is monitored primarily using passive methods. Post-trip out of policy reporting is the most frequent
compliance management method used.
3
The latest research study from BottomLine Group explores key elements of corporate travel management:
Strategy, Sourcing and Optimization
STRATEGY
SOURCING
OPTIMIZATION
Executive Summary

Approach & Methodology
 The target audience of the survey was North American corporations with large, established travel
programs. Industries represented in the survey results include: Financial Services,
Manufacturing, Pharmaceutical/Health Care, Professional Services/Consulting, Retail &
Wholesale Trade, Technology, Telecom, Utilities and Other.
 The study was conducted in two parts. In phase one, respondents completed an online survey.
Phase two consisted of telephone interviews with the majority of survey respondents, in an effort
to validate key indicators and to gain further insights.
 Respondents were assured anonymity and did not receive any financial compensation for
participating in the survey.
 47 corporate travel practitioners participated in the study.
4
The BottomLine Group conducted a research study on corporate travel management to establish new
benchmarks and to identify best practices in a number of areas, including travel policy and hotel program
management.

• 34% of respondents employ more than
50,000 employees.
• 68% of respondents are responsible for
global management of the Transient
Hotel/Travel Program.
• Of the 68% with global responsibility, 55%
are responsible for the global hotel
program without the support of regional
travel managers. 13% have support from
the regions.
Respondent Profiles
5
Size of Organization
Key Highlights
Scope of Responsibility
Hotel Transient Spend - Annual
($MM USD)
<9,999
employees,
34%
10,000-
24,999
employees,
19%
25,000-
49,999
employees,
13%
50,000-
99,999
employees,
13%
100,000 +
employees,
21%
Global
Responsibility;
No Regional
Support, 55%
Global
Responsibility
with Regional
Support, 13%
North America
Responsibility,
17%
Other, 15%
The majority of the 47 respondents lead large, globally managed hotel programs.
< $10
30%
$10-$30
38%
$30-$50
9%
$50-$100
6%
> $100
17%

Corporate Travel Policy
6
[CELLRAN
GE]
[CELLRAN
GE]
[CELLRAN
GE]
Mandated
Recommended Guidelines
Per Diem Guidelines
CORPORATE TRAVEL POLICY - LEVEL OF MANDATING
% of respondents
KEY OBSERVATIONS
Which of the following statements best describes your corporate culture as it relates to business
transient hotel spend in your travel policy?
1. Only 24% have a culture with a mandated hotel travel
policy.
2. Mandated policy usage scales with size:
50% of large corporations mandate (100,000+
employees) and 19% of smaller corporations mandate
(<9,999 employees).
3. A mandated policy is most common (33% of
respondents) in these industries:
Manufacturing, Retail/Wholesale Trade, Telecom,
Utilities.
4. Survey results indicate that 43% have a multi-tier
travel policy (different policies for tier of VP’s,
business units, etc.).
The degree of autonomy or control in a travel policy is driven by the company’ s culture.
Best Practice is a mandated minimum policy globally, with regional or business unit level discretion to tighten the
policy.
Question
BLG
Perspective
STRATEGY

Program Goals
7
[CELLRAN
GE]
[CELLRAN
GE]
[CELLRAN
GE]
[CELLRAN
GE]
[CELLRAN
GE]
Compliance
Traveler
Satisfaction
Contracted/
Sourced Savings
Actual Savings
Traveler Safety
PROGRAM GOALS
% Respondents Ranking this Goal as #1
From your vantage point, which of the following hotel program goals are most important to your
organization?
1. Traveler Safety is the number one concern among
survey respondents.
2. This is consistent across all organizations with >25,000
employees.
• Companies with 10,000-24,999 employees rank
sourced savings highest
• Companies with <9,999 employees rank actual
savings highest
3. Industries that ranked Actual Savings as the #1 goal
over Traveler Safety: Pharma/HealthCare,
Manufacturing, Telecom
4. Professional Services industry ranks Traveler
Satisfaction as the highest.
STRATEGY
Question
KEY OBSERVATIONS
Elements to foster traveler safety include selection of the right hotels, access to booked data for knowledge of
traveler locations, and easy access to communicate with travelers when needed.
Best Practice is to select properly vetted business hotels.
Ensure travelers book through approved methods which provide location visibility before and during trip.
BLG
Perspective

Open Booking Confidence
8
How confident are you that your hotel program is delivering material value relative to an "open
booking” environment?
9%
45%
21%
4%
21%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Extremely
Confident
Very
Confident
Somewhat
Confident
Not
Confident
Don't know
KEY OBSERVATIONS
1. 46% of respondents are not fully confident that
preferred hotel programs are delivering value
versus “open booking”.
2. In follow-up discussions, we learned:
• Most respondents do not allow open booking
of hotels and believe their negotiated rates are
more competitive.
• Travel managers believe preferred rates are
better overall, but do not have explicit
evidence. The challenge is that there is limited
quantitative data on this.
• In instances when lower rates are found on
the open market, travel managers have found
that they can include rate restrictions.
CONFIDENCE THAT RATES ARE BETTER THAN OPEN BOOKING
% of respondents
STRATEGY
Question
If Open Booking is used as a strategy, peer benchmarking of rates by hotel and market should occur to validate
the impact. Two additional studies conducted by BLG have shown that there is 7-12% premium paid with open
bookings.
Best Practice is to maintain preferred rates for high-volume properties and markets.
BLG
Perspective

Program Effectiveness
9
How would you assess the overall effectiveness of your hotel program? (Scale of 1-10; 10 is
best)
0% 4%
9%
72%
15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
1-2 3-4 5-6 7-8 9-10
1. Average self-assessed effectiveness
score is 7.5 out of 10.
2. Overall, travel management staff believe
they are effective and delivering value, but
still see some room for improvement.
3. The main improvement area cited was to
manage and monitor the program more
closely during the year.
STRATEGY
Question
Best Practice: Regular benchmarking will provide greater confidence in program strength or confirm areas that could
benefit from improvement measures.
PROGRAM EFFECTIVENESS
Ratings by % of respondents
KEY OBSERVATIONS

Long-Term Stay
10
66%
34%
0%
10%
20%
30%
40%
50%
60%
70%
Leverage long-term stay spend
as part of transient sourcing
process
Run a separate sourcing event
How are long-term stay requirements managed within your organization’s hotel sourcing process?
1. The majority of respondents incorporate
their long-term stay needs in their transient
sourcing process.
2. About one-third of respondents will run a
separate sourcing event for their long-term
needs.
STRATEGY
Question
Best Practice: If there is significant recurring demand in specific regions, a focused long-term stay RFP can result in lower
pricing. However, most companies can use the extended stay module within a standard transient RFP to address their long-
term needs.
KEY OBSERVATIONSLONG TERM STAY SOURCING
% of respondents

Other Strategies
11
Do you use rate caps? 53%
KEY OBSERVATIONS
Respondents use hotel rate caps for cities with high demand
and for markets lacking preferred coverage.
Best Practice: Rate caps are most valuable in volatile/high
demand markets or to cover regions where there is low
preferred coverage.
Do you use city or country per
diems? 26%
Only 26% of respondents use per diems in their travel
programs, restricting travelers to use a specific daily allowance
on lodging.
Best Practice: Per diems can be effective tools for keeping
expenses down, or to provide traveler guidance when booking
in areas not included in the hotel directory.
RESULT
Does new employee orientation
process include travel policy?
60%
40% of companies do not introduce new employees to the
travel policy.
Best Practice: Every new employee should be introduced to
the travel policy. Best companies require written acceptance
from each employee.
Yes
STRATEGY
Question

Sourcing Process
12
HOTEL SOURCING PROCESS
% of respondents
1. Survey results show that 53% of respondents
use some outside help to execute and
negotiate the annual hotel program.
Description of Options:
• In-house: Hotel program entirely managed by
in-house staff. Global/Regional Travel
Manager(s) negotiate directly with hotels.
• Third party: Travel Manager uses a third party
(consultancy or TMC) to negotiate rates and
run the process.
• Combination approach: Travel Manager still
executes part or most of the process. A third
party is used for some or all of the process.
Which of the following best describes your organization’s hotel sourcing process?
In-House
47%
Third Party
33%
Combination
20%
SOURCING
Question
KEY OBSERVATIONS
Third party firms have experience consolidating multiple data sources (TMC, supplier and credit card) to build
the solicitation list, access to robust benchmarking data, and proven negotiating abilities.
Best Practice companies use third party resources to leverage their expert advice, tackle data consolidation
needs, secure incremental savings, build strategies for improvement, and gain efficiencies in the overall process.
BLG
Perspective

Data Sources Used
13
KEY OBSERVATIONS
1. TMC Data is used by 94% of respondents.
2. Hotel Reports are the second most widely used (72%)
data source.
94%
72%
60%
38%
TMC Data Hotel Reports
(from chain
/property)
Credit Card Data Expense
Management
Tool(s)
Which of the following data sources are used to
support your organization’s global hotel sourcing
and on-going optimization?
What combination of data sources are used?
KEY OBSERVATIONS
1. TMC data is the only source used on its own, by only 15% of those
surveyed. The most common combinations are TMC/Card/Hotel
(24%) and TMC/Card/Hotel/Expense (21%).
2. The usage of data sources is quite varied. Much of this is due to the
quality of each data source, and the capability to quickly aggregate
the sources.
% OF RESPONDENTS USING EACH DATA COMBINATION
15%
0%
6%
15%
2%
24%
6%
11%
21%
0%
5%
10%
15%
20%
25%
30%
SOURCING
Questions
DATA SOURCES LEVERAGED
% of Respondents
TMC data alone is not enough to determine hotel spend. Survey results indicated that 73% of bookings go
through the agency, so on average, 27% of spend is not accounted for in the TMC data. Failing to consolidate
all available data sources can lead to missed opportunities and decreased negotiation leverage.
Best Practice is to aggregate TMC and Card spend at a minimum.
BLG
Perspective

Sourcing Time Invested
14
34%
58%
6%
2%
0-3 months
4-6 months
7-9 months
More than 12
months
How many months does it typically take to complete a business transient hotel sourcing
engagement? (Kick-off to hotel rates available for booking)Q:
KEY OBSERVATIONS
1. The majority of respondents take 4-6
months to complete a hotel program.
2. With 53% of respondents leveraging outside
resources (see earlier metric), it is evident
that there is a need in the marketplace for
support in moving the process along swiftly.
Most companies do not have the bandwidth
to put the right amount of focus on the hotel
program for several months.
Question
Hotel sourcing is a time-consuming process influenced by: number of properties, number of data sources used,
and desire for incremental savings (which drives deeper effort).
Best Practice is to complete the sourcing within four months. Leading up to this sourcing phase, it is important
to revisit the hotel strategy. Key questions are: Has our strategy changed? Did we source the right hotels last
year? Did we include the right cities? Is our policy aligned with our objectives?
BLG
Perspective
SOURCING

Other Sourcing Tactics
15
Do you negotiate chain-
wide discounts?
KEY OBSERVATIONS
87% of companies surveyed benefit from chain-wide
discounts.
Best Practice is for clients to supplement their preferred
programs with chain-wide discounts in markets where volume
is not large enough to warrant a negotiated rate.
Do you have dynamic rates (i.e.,
% off BAR) with one or more
preferred properties?
RESULT
87%
When used, average dynamic discount is 25.5% off BAR.
Use of dynamic rates is skewed towards smaller firms (50% usage
for <9,999 employees, only 30% for >100,000 employees).
Of those with dynamic rates, 68% of respondents have dynamic
rates in 10-20% of preferred hotels, only a portion of their
programs.
Best Practice: Dynamic rates are selectively used by clients to
offer additional options in high demand markets.
41%
Do you profile spend by day of
week during negotiations?
Only 28% of companies surveyed analyze day of week
metrics for use in negotiations.
Best Practice: Day of week analysis can be useful to
share with hotels, especially when stay patterns are
attractive to hotels to fill non-peak nights.
28%
SOURCING
Questions
Yes

Hotel Bookings by Channel
16
What percentage of your organization’s transient hotel spend is booked through the following
channels?
KEY OBSERVATIONS
1. On average, 73% of hotel bookings are made
via the TMC.
2. This results in 27% that are booked directly
with the hotel or through ‘other’ channels.
3. Of those bookings via the TMC, 65% are
booked through an Online Booking Tool
(OBT) versus an agent.
27%
73%
Other (hotel direct, consumer website, etc.)
Travel Management Company (on-line or offline
bookings)
65%
35%
On-line Offline
BOOKED THOUGH TMC VS. OTHER
% of transactions
TMC ONLY – ONLINE VS OFFLINE
% of transactions
OPTIMIZATION
Question
It is critical to include non-agency data sources to improve spend visibility. Additionally, increasing bookings
through the agency aligns with a company’s objectives to focus on traveler safety and security.
Best Practice is to promote or enforce bookings through the travel agency.
BLG
Perspective

Payment Capture
17
What percentage of your organization’s business transient hotel stays are paid for through the
following forms of payment: corporate cards, personal cards or other?
KEY OBSERVATIONS
1. Only 50% of respondents have a corporate card
policy well implemented (>90% of spend).
2. Larger corporations are more successful
mandating corporate cards. Respondents with
over 80% capture have twice the hotel spend
of other respondents.
3. Only 13% of respondents with >50% of transient
spend allow expenses to be paid using a
personal credit card (with reimbursements).
0% 20% 40% 60%
0% - 19%
20% - 39%
40% - 59%
60% - 79%
80% - 89%
90% - 100%
% OF HOTEL SPEND PAID FOR USING A CORPORATE CARD
Question
%ofspendonCard
% of respondents
Since not all hotels are booked through the approved agency, corporate card adoption and data capture is key for
understanding the complete picture of hotel spend. This also simplifies expense reporting.
Best Practice is to mandate the use of a corporate card for all travel spend.
OPTIMIZATION
BLG
Perspective

Performing Rate Audits
18
Do you conduct a GDS rate audit of your preferred properties during the year?
[CELLRAN
GE]
[CELLRAN
GE]
[CELLRAN
GE]
Yes
No
Don't
Know
GDS RATE AUDITS CONDUCTED POST-SOURCING
% of respondents
KEY OBSERVATIONS
1. The survey shows that 35% of respondents
do not perform any audits of negotiated
rates.
2. Of the 61% that conducted rate audits,
respondents estimated that 20% of rates
were found to be incorrect in the first rate
audit.
3. Of those that conducted a first rate audit and
took corrective action, 9% of rates on average
were still found to be incorrect in the second
rate audit.
OPTIMIZATION
Question
Hotels or chains have the responsibility of loading rates into the Global Distribution Systems (GDS). The hotel
rate audit is the tool used to test negotiated rates to ensure they are accurate and available to be booked.
Quarterly rate audits are recommended to ensure correct rates remain loaded throughout all seasons.
Best Practice is to conduct at least two rate audits after the sourcing process has ended.
BLG
Perspective

Spend Under Contract
19
KEY OBSERVATIONS
1. Average spend under contract (compliance) to preferred
properties is 73%.
Note 1: ‘Under contract' refers to spend in cities with negotiated rates at preferred
hotels as well as discounts from chain-wide or brand-specific agreements
73% Average
0
10
20
30
40
50
60
70
80
90
100
Each Survey Respondent
What percentage of your organization’s business
transient hotel spend is under contract1 with
preferred properties?
How often is hotel spend under contract versus spend
with non-contracted suppliers reviewed?
17%
35%
24%
7%
2%
4%
11%
0%
5%
10%
15%
20%
25%
30%
35%
40%
KEY OBSERVATIONS
1. Most respondents perform some sort of spend review, but 48% of
respondents are not monitoring compliance during the course of
the program year.
OPTIMIZATION
Question
Best Practice: 100% is not realistic program-wide.
However, top markets should be operating at a level of
90% or higher. These are markets that travelers frequent
often and should be well aware of preferred options.
Best Practice: Review hotel compliance quarterly, looking
for high volume non-preferred hotels or non-preferred cities
that need to be addressed. This type of analysis also helps
to prepare for hotel chain review meetings.
48%

Compliance to Travel Policy
20
Which of the following activities does your organization use to maximize travel policy compliance as
it relates to hotel bookings? (Select all that apply)
[CELLRANG
E]
[CELLRANG
E]
[CELLRANG
E]
[CELLRANG
E]
0
5
10
15
20
25
30
35
40
Post-Trip
Exception Emails
None / Not
Available
Pre-Trip
Authorization
Out of Policy
Reporting
MAXIMIZING TRAVEL COMPLIANCE METHODS
% of respondents
KEY OBSERVATIONS
1. According to the survey, the majority of
compliance actions are reactive, not proactive.
All mandated policies involve at least one
compliance approach.
2. Travel managers should be aware of rogue
spending that occurs and look for measures to
reign this in.
3. The average response was 63% to the following
survey question: “Please indicate the percentage
of bookings wherein the average booked rate is
the same as or below the contracted (negotiated)
rate”. This indicates that 37% of rates are booked
higher than the preferred rates.
Question
Best Practice is to incorporate pre-trip exception-based audits to look for high rates, or non-preferred hotel
bookings in a city with a preferred hotel, or overnight air without a hotel booking. Monitoring reports and
educating travelers is key to improving hotel compliance.
BLG
Perspective
OPTIMIZATION

© Copyright 2016. BottomLine Group. All rights reserved.© Copyright 2016. BottomLine Group. All rights reserved. 21
AboutBottomLine
Group An
independent
North
American
based
consultancy
focused on
helping
clients
manage
expenses
Extensive
travel
knowledge
+ objective,
consultative
approach
Hotel Sourcing & Optimization
Assessment
Sourcing and Negotiations
Benchmarking
Optimization and Supplier Management
Airline Sourcing & Supplier Management
Assessment
Sourcing and Negotiation
Benchmarking
Optimization
Travel Strategy & Policy
Travel Program and Category Strategy
Travel and Meetings Policy
TMC Sourcing & Contract Management
Performance Audit
Online Tool Review
Strategic Sourcing
We advise clients primarily in the following areas:
For more information on this report or
BottomLine Group please contact:
Al Norman, Director
Al.Norman@bottomlineconsulting.com
416-804-8050
Home Office: Toronto, ON, Canada
Associates also located in:
Vancouver, BC, Canada
Waterloo, ON, Canada
Los Angeles, CA, USA
Philadelphia, PA, USA
Richmond, VA, USA

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Editor's Notes