TMCs demand clarity on hotel rate strategies

Specialists losing out to wholesaler and destination management firms

The Travel Consulting Group president Benjo Van Laarhaven.
The Travel Consulting Group president Benjo Van Laarhaven.

Travel experts revealed concerns about the low number of hotel bookings going through travel management companies (TMCs) at a recent Association of Corporate Travel Executives (ACTE) forum in Dubai.

According to a report by Chris Pouney, director, Business Travel, Severnside Consulting: “GDS companies estimate that in Western Europe, for every 50 GDS-made passenger name record (PNR) for an air transaction, there is one hotel room night. For the Middle East this ratio is 1000:1”.

Pouney attributed this to the trend for booking hotels “via local relationships” in the Middle East.

“Travel managers despair as spend; volume and travel security data are not captured,” said Pouney.

“Resistance at local level is driven by a variety of reasons: culturally it is seen as a hospitable gesture to book a guest’s room. Bookers claim better rates are achieved locally, a claim refuted by the hotels.

Additionally, non-preferred hotels have been known to offer incentives to local bookers to capture additional business.

“The majority of hotel bookings in this region are made via consolidators (Wholesaler, DMCs). This buying pattern is often justified by the fact that agents have credit facilities in place,” added Pouney.

Hoteliers present at the forum were keen to defend their commitment to the best practice of rate parity — whereby the hotel offers the same rate with the same conditions regardless of the distribution channels used for booking — whereas TMCs asked the question “why shouldn’t they get a better deal in exchange for their services?”

Jumeirah Group vice president sales Thomas Grundner said: “Rate parity is the key to success —there should not be a different rate for TMCs and for a corporate if approached directly.

It is a very important element for success. Rate is such a powerful element and we cannot go back and undo the good work that has been done over the last few years.”

Accor regional director of revenue management Bassem Salam said: “The key is rate parity – you have to have the same rates”.

But forum participants questioned why they could find cheaper rates through hotel consolidators online than booking direct through the front desk.

Salem said: “In a hotel there are multiple levels of rate – there are fully restricted rate and best available rate. Someone on the front desk might not have realised that they should have offered you the best available rate.”

The Travel Consulting Group president Benjo Van Laarhaven said that “trust was the biggest problem” when it came to rates.

“I would have wished in my years in the TMC world to have a session with hotel professionals on some of these definitions – RevPar, last-minute availability... what are they all about?” Laarhaven said.

“Hotels have created an industry that is incredibly complex and they have benefited from that. But I think now the future is changing — by sharing and through education, we can improve the entire industry and create more trust.”

Grunder suggested that TMCs had a responsibility to establish strong relationships with hotels.

“From a hotel perspective it’s important to come back to the RFP [request for proposal]. So from a hotel perspective – is the partner able the support us in being part of the programme? Has that been established through a great relationship? If so then excellent. If we are not part of the RPF then the relationship goes in the wrong direction,” he warned.

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