Leakage is growing problem for travel managers – and ultimately for hoteliers. Why it is important for travel managers to battle off-bookings
Text: Lois Hoyal // FOTOS: iStock
Leakage is a word increasingly heard within the hotel industry but what precisely is it and why is everyone in corporate travel getting so worked up about it? In essence, leakage refers to the growing practice of employees booking business travel outside of their company’s agreed supplier or designated travel management system. In fact, a Phocuswright study shows that more than half of all business travelers book their own hotels using a mobile device, rather than going via their company’s recommended provider. These bookings often remain invisible to the company and its travel management company (TMC) until an employee submits his or her travel expenses or reports details of their travel itinerary to their travel manager.
What’s this to do with hotels you might ask? And why can’t hotels offer direct bookings as a viable alternative? Actually direct bookings damage a corporate travel program, damages travel managers and therefore ultimately damages a hotel’s relationship with its corporate client. It’s important to look at the bigger picture and remember that travel managers are important people for hoteliers. After all, they’re the ones who can steer customers into a hotel and bring you that yearned for corporate travel account. Hoteliers need to nurture their relationship with travel managers, not damage it. Turning a blind eye to leakage and letting executives book directly will dissuade a travel manager from turning to you in future as a favored hotel for a corporate travel program. And likewise a hotel might not feel so forthcoming with rate discounts or as generous in subsequent contract negotiations.
There’s also the issue of data. Hotels spend time negotiating rates for companies so when their executives don’t book in-channel, companies lose oversight of the booking data and corporate usage of their hotel. If an executive books directly, neither the company nor the hotel has any record that an executive has stayed in that hotel. This can lead to several problems. Firstly, a hotelier doesn’t know whether a company is taking advantage of their agreed deal or secondly, whether it works. Moreover, it can’t tailor its offering to provide an enhanced guest experience, such as a personalized greeting. Furthermore, if a company doesn’t know if an executive is staying at a hotel it might wrongly assume that a particular hotel isn’t of any use to their executives and choose not to pursue their relationship.
So why exactly are executives shunning their corporate travel program when it comes to travel plans? It’s largely because millennial travellers live in a digital era, where they’re accustomed to using mobile apps or home computers to make travel arrangements online. Unfortunately, this behavior is increasingly spilling over into corporate travel bookings as many executives like the comfort of the familiar online sites they already use for leisure travel.
In addition, many executives are falling victim to relentless, personalized marketing campaigns, travel management consultant, Will Tate, partner at GoldSpring Consulting said in an interview. “The main reasons leakage is increasing include direct sales additional offers. But the lower rates promised or additional benefits such as free Wi-Fi are not always delivered.”
Others are frustrated by the lack of availability of a certain hotel in their self-booking tools or find regular booking tools limiting and difficult to use. Some executives prefer alternative lodging services, like Airbnb, which might not be available in their corporate program.
Sadly, many aren’t aware they’re doing anything wrong. As the Phocuswright report notes, “many travelers who book outside of their policy believe they are saving their company money by shopping for better deals”. But that’s the main misunderstanding: Even if the direct booking comes at a lower price, then by bypassing the company's internal processes with a direct booking, the company’s total costs are ultimately higher than the supposed direct price savings. In effect, everybody loses.