Egencia’s Mid-Year Hotel Review Identifies Saving Opportunities for Businesses

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Report shows a fundamental shift between corporations and hotels demonstrating missed savings in top U.S. cities for corporate travel programs’ negotiated rates

BELLEVUE, Wash.—(July 30, 2013)—Egencia®, the business travel company of Expedia, Inc. (NASDAQ: EXPE), today released its first Mid-Year Hotel Review to help travel and procurement professionals and corporate stakeholders identify opportunities  in a company’s preferred hotel program that can be leveraged for additional savings.

Hotels are constantly adjusting room rates to find the optimal mix of supply and demand,” says Chris Vukelich, Egencia’s vice president of supplier relations, Americas. “This means a company’s savings from their own negotiated rates can vary significantly throughout the course of the year.  Signing the contract with a hotel is just the beginning; in order to ensure savings are actualized, travel and procurement professionals need to be vigilant and take action when negotiated rates rise above market averages.”

Specifically, Egencia reports a shift in the market to negotiated rates across all categories of hotels: large, regional and independents. When comparing hotel bookings for second half 2012 to second half 2013, negotiated bookings (as a percentage of total bookings) in large hotel chains are up nearly 7 percent, in regional chains it is up 4 percent, and in independents it is up 3 percent.

According to Egencia’s findings, nearly 88 percent of negotiated rates are booked at large hotel chains, and the move is much more pronounced in the 10 largest corporate markets in the United States including: Atlanta, Boston, Chicago, Dallas, Los Angeles, New York City, Philadelphia, Phoenix, Pittsburgh, and Seattle.

When looking at average daily rates (ADR), Egencia has found that while non-negotiated rates have stayed relatively flat, negotiated rates have increased year-over-year in both large hotel chains (5.1%) and regional hotel chains (4.5%), while declining in independent hotels (-5.1%).

The top five cities with the highest negotiated rate increase include: Philadelphia (24.6%), Dallas (12.8%), Pittsburgh (12.2%), Los Angeles (8.1%) and Boston (7.2%). Seattle is the only market that reported a decline in negotiated rates (-3.1%).  Additionally, negotiated rates have accelerated at a much faster pace than clients’ non-negotiated rates in these markets which is likely driven by an increase in chain-wide discounts, says Vukelich.

Egencia’s Mid-Year Hotel Review recommends that corporations should focus their negotiations in key markets where the volume is instead of relying on chain-wide discounts across every market.  This approach will help ensure negotiated rates are available in markets that are experiencing high demand. In other markets, Egencia recommends that travel and procurement professionals work with a travel management company to augment their hotel programs. Vukelich adds, “It’s also important to recognize the shift from agent-assisted bookings to online bookings in the managed corporate travel environment. We report a 92% online adoption with our customers.”

When it comes to online booking, companies that have negotiated rates naturally want these properties at the top of the search results in the booking tool so travelers will select them first, says Vukelich. “This approach can push hotels that offer better value off the first page and onto the second or even third page of the booking tool—making them less visible and less likely to be chosen.”

At the GBTA 2013 Convention, Egencia will share a new methodology around how the company will represent its clients’ best interest to address hotel value at its booth, number 925.

Savings are also missed due to dynamic market conditions which result in better rates at hotels that are not being surfaced or rising high enough in the sort order for travelers. Egencia suggests scoring and ranking hotels by what the company values, including price, reviews and amenities, versus leading with negotiated rates. “This novel methodology will help ensure travelers continue to book hotels in a managed environment—making them more productive and possibly happier while on the road because they are staying at hotels that their company deems best suited for them as a business traveler and maximizing company savings” adds Vukelich.

Egencia’s Mid-Year Hotel Review is based on a sample size of less than eight percent of historical second half bookings (based on 2012 data). To compile the report, Egencia used data from the first half of 2013 based on its North American customers’ hotel bookings from January 1 through June 30 for hotel stays in July 1 through December 31 to show that a fundamental shift has occurred in the relationship between corporations and hotels.  

For a complimentary copy of the report or to engage with Egencia’s Consulting Services group, please email consult@egencia.com or call 866-328-0110.

About Egencia, an Expedia, Inc. company

Egencia is a leading full-service travel management company delivering innovative corporate travel solutions and expert local service to more than 10,000 clients in nearly 60 countries around the world. As part of Expedia, Inc., the world's largest travel company, Egencia provides forward-looking companies with the ability to drive compliance and cost savings in their travel programs, while meeting the needs and requirements of the modern business traveler. For more information, please visit www.egencia.com or follow us on Twitter @Egencia.

Egencia and the Egencia logo are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries.  All other trademarks are the property of their respective owners.  © 2013 Egencia, LLC.  All rights reserved.  CST # 2029030-50; CST # 2083922-50.

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Media Contact:                                                                                                                                                                   

Kristin Treat | PR Manager, North America

Email: ktreat@egencia.com

Office: 425-679-4930 | Mobile: 425-214-6026

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Quotes

“Hotels are constantly adjusting room rates to find the optimal mix of supply and demand. This means a company’s savings from their own negotiated rates can vary significantly throughout the course of the year. Signing the contract with a hotel is just the beginning; in order to ensure savings are actualized, travel and procurement professionals need to be vigilant and take action when negotiated rates rise above market averages.”
Chris Vukelich, Egencia's vice president, supplier relations, Americas