Best Practice: Hotel Sourcing Strategy Study

We’re moving into the hotel sourcing season, so take a moment and think about your favorite little black dress or your best power suit.  What makes it your favorite? And how the heck does this relate to hotel sourcing?

Great clothes project the image you want.  They send signals.  They help define your image.  And if you’ve chosen carefully, they help achieve your goals. But they’ll only do that if your clothes fit like a glove.  See where this is going?

My sense is that most hotel sourcing projects are the equivalent of a mad dash through the bargain basement.  The shopper has bid list that was thrown together, largely based on last year’s list.  Custom fitting a bid list amounts to tossing the suit to a tailor and saying “Let the waist out a couple of inches, and I need it back tomorrow.”

There’s a better way to create your hotel bid list.  It’s called a strategy study, which makes it sound sexy, which helps justify its cost and extra time.  But if you really want to project the right image with your hotel program, you should try one on.  Here’s how it works, and why it’s so important:

It starts with your typical hotel sourcing data –   hotel spend from your corporate card, hotel bookings from your travel agency, and current list of preferred hotels and rates.  Use this data to create clusters. Clusters define your hotel footprint – where your travelers stay and how much they pay.

To this, the clustering tool adds in the unused hotels – those that are near hotels that your travelers used. It includes unused hotels that are a star or even two stars lower (and higher) in quality than what your travelers have used.  There may or may not be very many, but they become important pieces of the strategy study.

Now you’re ready to try your program on and get some preliminary reactions.  By this, I mean you can now estimate which cost reduction levers  are available to you, and how much each is likely to yield.  These savings levers include:

  • Savings from higher compliance to the existing program
  • Savings from better rate negotiations at existing preferred properties
  • Savings from adding more preferred hotels and expanding your program
  • Savings from tiering down – moving your travelers into nearby but lower-quality hotels
  • Savings from avoiding hotels that don’t have good rate availability

The result might look like this:

Hotel Strategy Study Findings

Now you’re armed with good, fact-based options for tailoring your hotel program to your desired goals.  Once you socialize these options with senior management, you’ll know how much appetite there is for pursuing each option.  Once you know that, you can now create a custom-fit bid list of the hotels that are aligned with your overall program’s goals.  Wear your new program with confidence!

P.S.  I’ll cover this topic in more detail at NBTA’s Convention in Houston – once on August 8th in the Travel Procurement Workshop, and again on August 10th in the Hotel Sourcing Bootcamp session.

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2 thoughts on “Best Practice: Hotel Sourcing Strategy Study

  1. Pingback: Travel Procurement Workshop at NBTA 2010 | Gillespie's Guide to Travel+Procurement

  2. Pingback: Top Posts from 2010 Travel+Procurement | Gillespie's Guide to Travel+Procurement

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