Subject matter experts from TCG’s Global Hotel Practice share supplemental insights from 2016’s Corporate Hotel Sourcing  following Julie Sickel’s article, 2016 Hotel Contract Negotiations:  Tougher Dealings, Softer Rates written for Business Travel News.

What is TCG seeing based on recent client engagements?
While some major markets were more challenging than others, TCG negotiations produced 2016 rates well below the industry increase forecasts. A sellers’ market remains entrenched globally, however.

What are emerging trends that companies need to take into account?

  1. Dynamic Pricing –  Most TCG clients have sustainable, static rate hotel programs.  However, dynamics provide an alternative cost-saving strategy in secondary, seasonal and compressed markets.
  2. Consolidation – The Marriott/Starwood merger is on, again… However, one outcome of the bidding war will be a potential for increased hotel rates in the combined entity to deliver ROI mandated by the financials of the merger/acquisiton. As we have seen come to pass in the airline industry, one major merger creates the environment for additional ones.

Is the sellers’ market still in place and why?
Absolutely. In part due to the North American supply still trying to keep pace with robust room night demand for transient, group & meetings travel. This trend is projected to continue through 2017 and into 2018.  Additionally, sold-out properties in Japan also continue to drive prices higher; however, other regions in secondary and tertiary APAC markets have softened a bit due to volatility in the Chinese marketplace.

What other trends should companies be aware of?
Even the best travel policy isn’t worth the paper it’s written on without enforcement and ongoing program management.