Travelmole Guest Comment: Trends in the hotel market

BSI, a procurement specialist in corporate accommodation and meetings and event management, has identified some trends emerging in the hotel sector in the first half of 2009.

Here, group managing director Trevor Elswood outlines some of the key changes:

“• First, a closer look at the accommodation market shows us that rates with breakfast included rose from 21.2% to 53% of all nights booked. This is a clear signal that hotels are continuing to load ‘value’ into the pricing in softer demand periods.

• Bill back is continuing to grow and all new BSI customer wins have been bought on to include this payment solution. Early in 2009, BSI reported a 4% increase in the number of nights booked using BSI’s comprehensive bill back payment process.

More recently, BSI has noted a further growth of 2% in the use of its bill back solution, as organisations look to drive higher levels of compliance to their policy and their preferred booking channels as well as reduce back-end customer processing costs.

This may seem somewhat surprising given the industry noise surrounding the use of credit cards. However, for BSI the evidence is clearly in favour of a payment solution which provides customers with consolidated booking and payment data and gives them comprehensive management information and validation that far outclasses credit cards for line item detail.

• Average room rate is continuing to tumble year on year across all locations with London, Birmingham, Leeds, Bristol, Manchester, Edinburgh and Glasgow recording some of the highest reductions of up to 22%

• Customer preferred programme compliance has reached record heights. This is reflective of stronger customer messaging and increased BSI support of compliance activity and robust authorisation processes

• Stay length has stabilised and is showing like for like, year on year levels.

• Day delegate rates have seen a 16% reduction and 24-hour rates a 26% fall, suggesting a continued soft meetings market and the focus of BSI’s strengthened meetings & events team when it comes to negotiation.

• Meetings attendance numbers have risen by 18% but meeting length has reduced by 14%, signifying the importance that customers still place on the value of ‘face-to-face’.

Evaluation of this data and customer profile points to signs of increased activity across all customer markets, albeit modest, suggesting an inkling of business confidence filtering back into the need for people to meet and travel.

Hotels in many locations point to some stronger occupancy levels, driven in London by the continued short stay European visitor demand, which in turn will start to build the room rate growth predicted in Q2 2010.

Meetings demand remains pretty flat and prices are very competitive. Commitment to contract out requirements remains a short lead time process, suggesting that this segment has still some way to go. There are, however new practises for internal meetings optimisation and tele and video conferencing that may never see the return of previous market levels as corporates find alternative ways to conduct meetings.”