Negotiated Hotel Rates Are Climbing

by Fred Gebhart

Chains Wield Negotiating Clout to Drive Higher Rates
Negotiated corporate hotel rates are rising faster than non-negotiated rates, according to Egencia, the business travel arm of Expedia. Egencia’s Mid-Year Hotel Review found that non-negotiated hotel rates have been flat in the first half of 2013 while negotiated rates are up by 5% for large chains and more than 4% for regional chains and down by 5% for independent properties.

Despite the hike in negotiated rates, their use is increasing. Egencia said most companies negotiate chain-wide discounts and the chains are leveraging that strong demand to reduce corporate discounts. It advises TMCs and companies to negotiate property-specific rates for their highest-volume destinations. That strategy will help concentrate buyers’ market share and strengthen their clout.

Hotel Occupancies and Daily Rates Are Increasing
Hotel and occupancy rates are rising, according to a PKF Hospitality Research. The company projects a national occupancy of nearly 64% in 2014, the strongest occupancy rate since 1997. Average daily rates will climb from more than 5% to more than 6% between 2014 to 2016, it said. The occupancy and rate increases will be highest in upper-tier properties.

Internet Concerns Top List of Hotel Complaints
Business travelers’ biggest complaint about hotels is a lack of Internet connectivity, according to an InterContinental Hotels Group survey of 1,000 travelers. More than 80% of those surveyed said free Internet service was extremely important. Most than half, 55%, said they preferred to communicate online rather than by phone while traveling and nearly half, 48%, said lack of Internet service was their top concern. Internet issues beat out complaints about noise, just over 40%, and poor transportation arrangements, nearly 40%.

Wide Disparity in Airfares
Airfares vary widely from domestic airport to airport, according to the Bureau of Transportation Statistics (BTS), the research arm of the U.S. Department of Transportation. The BTS ranked 100 airports from highest to lowest average roundtrip fares. The national average roundtrip ticket costs $374. Travelers who fly in and out of Huntsville, Ala. are stuck with the nation’s highest average roundtrip fare of $544. Atlantic City offers the lowest average roundtrip fare of $168.

The next four most expensive markets are Cincinnati, Houston/Bush Intercontinental, Washington Dulles and Newark Liberty. There’s no convenient alternative to Cincinnati but there are for the others. The average roundtrip fare for Bush Intercontinental is $503, while Houston Hobby, ranked 79, is $366. The average roundtrip out of Washington Dulles is $493 compared to Washington Reagan National’s $372 fare ranked at 58. Newark Liberty’s average roundtrip is $486 versus nearby JFK, ranked 23 at $418, and LaGuardia, number 68 at $359.

Tablets Top Phones for Hotel Searches
Mobile means more than phones or even smartphones. “Hotel Benchmarking Metrics,” a recent report from Adobe Systems, noted that while hotel searches from mobile devices already exceeds desktop searches, tablet searches are growing faster than phone searches.

Nearly 60% of mobile searches in the fourth quarter of 2012 came from tablets. That meshes with Google’s prediction that desktop hotel searches will fall 4% this year, phone searches will rise by 68% and tablet searches will soar by 180%. Another finding: tablet searchers spend more time on hotel websites than phone users, viewing 4.9 pages versus 3.4 pages seen on phone screens.

Mobile Is Driving Last-Minute Hotel Choices
Research from PhoCusWright has found that smart phones still rule when it comes to last-minute hotel bookings. The company reported that 21% of last-minute hotel bookings were made via smart phones compared to 13% made with a tablet. About 20% of all bookings for road trips are made on the road.

Airline Management Behind the Digital Times
“The culture and mindset of airline management have still not gotten a grasp on just how much the digital world has bypassed them. They run mega-sized businesses without redundant technology back-up systems. That’s how you get an American Airlines bust-up (the April 16 grounding of all AA flights) because some piece of network technology broke down and there was no bypass or backup. All the software was working but the airline couldn’t talk to their own airports. None of the other airlines hosted on Sabre or run by EDS went down, just American. That had to be something in the AA network switching center.” – Richard Eastman, president, The Eastman Group

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Tip of the Day

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