Sourcing is a word bandied around in the hotel industry but what exactly does it mean? In essence it’s a matter of matching supply and demand, benefiting both hotels and corporate customers alike. Marco D’Ilario, Senior Vice President Sourcing Solutions, HRS, explained in an interview.
Text: Lois Hoyal // FOTOS: shutterstock, ISTOCK
It can be challenging for hotels to access the attractive target group of business travellers -since corporations don’t have time to meet with many hotels during the annual hotel RFP season time given their limited resources. Corporations are looking for suppliers that assist them in getting greater cost savings and with removing complexity from their travel programs. HRS is addressing pain points for both hotels and corporates –specifically the annual, time-consuming, outdated sourcing exercise. The intelligent sourcing solutions assume full responsibility for hotel procurement for corporates. By developing novel proprietary technology, exclusively designed for hotel procurement and management, HRS offers a unique value proposition, not offered elsewhere in the market.
Using its database, HRS analyses billions of rates across the world. It then works with a company to devise a negotiation strategy before carrying out rate negotiations with hotels and ensuring that the desired rates remain available.
Work includes issuing calls for tender on HRS’s specially developed online platform, where hotels group their responses and rates. Once a corporate client confirms the rates, they are then automatically uploaded to the booking systems and continuously audited. The system measures market trends and occupancy rates, even advising corporates to accept higher room rates to ensure availability when demand is high.
Sourcing was previously a static exercise, which took place once a year and lasted far too long, said Marco D’Ilario, Senior Vice President Sourcing Solutions, in an interview. “The process was broken, took a long time and wasn’t really efficient. Also a lot of opportunities were lost – once a rate was negotiated it took a month to make it bookable.”
HRS decided to speed up the process by introducing a new, intelligent sourcing solution in 2018, which it extended globally in 2019. This reduced multistage negotiations previously lasting over six months to a single negotiation taking four weeks. Now, the entire sourcing process takes just eight weeks.
HRS also adapted the process to better suit supply and demand. “Corporates wanted to find better and convenient rates while hotels wanted to receive more consistent corporate demand, better distributed throughout the year,” said D’Ilario. Using its analytics, HRS identifies the exact target rate for each hotel based on historical factors and desired corporate conditions, such as breakfast included, thereby matching the right hotel and the right rate to the right customer.
Once the buyer has approved the rate, it appears on the system within 24 hours. HRS then starts the audit process, which immediately identifies any mistakes, allowing hotels to correct them right away.
The new system allows hotels to really focus on the business they want, while achieving full compliance and transparency, D’Ilario explained. “Hotels have a clean process, which is compliant to any internal requirements because everything is documented, detailing the history of any negotiations.”
Importantly, hotels can speed up their digital transformation, moving from a manual process to a digital one, with fully automated data analytics boosting efficiency.
And the process is broken down at country level so there is always a local consultant on hand to offer hotels tailored expert advice.
The ultimate benefits occur when a corporate links the sourcing process to the booking channel, said D’Ilario. “Ultimately what HRS has developed is a seamless process, where it takes care not only of continuous sourcing but of loading, auditing, filtering and providing a booking channel. This shows hotels the volumes negotiated.”
HRS engineers its customers’ full booking environment and handles the fulfillment of bookings. HRS makes its hotel partners bookable in all corporate booking channels, facilitating quick corporate bookings by both agents and travellers using online booking engines like Concur and Cytric.
It’s no surprise that large corporations, such as Siemens AG, decide to outsource the entire process to HRS, allowing their own people to remain involved in key decisions while the process is taken care of by vertical experts, thereby adding value to the entire hotel industry.