Making sales through private websites or personal relationships? That may work for private customers, but if you want to do business with companies – particularly large ones – you need to be visible in the places where their staff make their bookings.
text: Jürgen Baltes
Afew weeks ago, the Siemens Group transferred processing of its global hotel programme to HRS. HRS will buy hotel rooms for Siemens travellers in a total of 170 countries, negotiate special rates and upload them onto the company's booking systems. This is a volume of some three million hotel stays per year.
Siemens is probably one of the largest buyers of reserved hotel rooms worldwide. However, there are many others, particularly large companies, that book their hotel stays with specialist partners such as HRS rather than directly with the hotel. These partners ensure that travellers stay within the specified budget and book with the hotels the company wants because, for example, they have negotiated special rates.
To that end, large companies use their own booking systems, which are called Online Booking Engines (OBE). One well-known system is Cytric, a subsidiary of the flight reservation system Amadeus. The OBE is used to predefine the exact conditions under which staff fly or spend the night. Typically, the airlines, flight class or maximum budget are specified. In the hotel industry, the companies tend to control the specific chains while allowing the booking of individual hotels up to a fixed price limit. Rather than connecting to the latter directly, though, they usually go through partners such as hotel portals on the OBE.
The latest 2017 business travel analysis conducted by the German Business Travel Association (Verband Deutsches Reisemanagement – VDR) revealed some interesting facts about how companies actually book hotels. The companies' travel managers were asked which channels they would prefer to use for booking hotels in future (see graphic).
The results differed depending on the size of the company. Large companies focus primarily on their own OBEs – 65 percent use one – and on online portals/travel agencies. Some even work with physical travel agencies or combine channels. Only 12 percent book directly with the service provider, such as a hotel. The small ones, on the other hand, mainly book directly or through online portals and scarcely use OBEs. Traditional travel agencies play hardly any role in hotel bookings any more, accounting for only 1.6 percent of bookings.
Meanwhile, travel managers agree that "open booking", which allows travellers to decide which hotel to book themselves, is not an option. It would mean companies handing over the reins. Clear booking methods are important for two reasons: travellers actually book the corporate rates so painstakingly negotiated by the company and can be located quickly in the event of a crisis (because companies have a statutory duty of care towards their employees).
Companies don't want to hand over control of their payment methods either. There tend to be clear rules on how trips are invoiced and paid for. Here, the credit card is the payment method of choice. Whereas flights are often booked and paid for in advance through a central corporate account, travellers generally pay their hotel invoices on site, usually with a corporate credit card. Companies are, however, increasingly focussing on virtual credit cards. Here, rather than flashing the plastic, travellers simply take out their smartphones. A pre-authorised amount is then debited using a one-off transaction number. Experts assume that the acceptance of virtual cards will play a key role in future corporate business.v
VDR's calculations show that corporate business is particularly worthwhile for the hotel industry. According to them, spending on hotel stays has been on the rise for years, something the he Association attributes both to the increasing number of business trips and the growing proportion of overnight trips.
If you look at the systems used by companies to book their business trips, you'll notice that the individual aspects, such as travel authorisation, booking of flights, hotels and other services, payment and accounting, are moving closer and closer together. VDR experts believe that in 10–15 years' time, just one single application will be needed to organise a complete business trip. For hoteliers wanting a piece of the corporate business pie, getting "inside" these applications could be vital.