Australian hotel rates are likely to increase next year, with a study of the domestic hotel market by Deloitte revealing that occupancy and rates are expected to rise in capital cities, and corporate travel specialist FCm Travel Solutions is advising companies to start their 2012 hotel contracting process as early as possible so as to lock in the best rates.
Annual hotel contracting generally takes place from October through to the early months of the new year.
However, higher occupancy at Australian hotels, potential price rises and limited supply of new hotels in Australia in 2012 means that now is the time to start shopping around.
"Corporates about to head down the path of contract negotiations should be surveying the market now to see what's on offer and which style of hotel pricing will deliver the best outcomes for their travel programs over the mid to long term" suggests David Strickland, FCm Australia's corporate product manager.
“We are advising all clients with sufficient room night volumes to start thinking about contract renewals and pricing strategies in July after reviewing their half-year productivity reports, rather than leaving the process until the last quarter of 2011."
Strickland explains this as a valuable strategic play to ensure best value for your corporate travel budget.
“Once hotels start locking in their corporate customers and they get a better idea of what business they can expect for the following year, they may be less inclined to negotiate on rates if their rooms are in high demand.”
FCm believes that strengthening market conditions meant hotels may be keen to move corporates with smaller volumes of business, from a fixed rate to discounted best available rates -- a pricing strategy generally known as dynamic pricing where the rate fluctuates according to supply and demand.
Mr Strickland said companies keen to save on their accommodation costs should also be focusing on streamlining and consolidating their accommodation programs in preparation for the new season.
“Companies should ensure they are mandating their policies for accommodation. This means checking that travellers are booking hotels that are included as part of a company’s preferred hotel program, using the right booking channels and ensuring rate caps are being adhered to,” he said.
“Corporates should also be checking they are delivering on their expected room night volume targets with hotels. This will be an area that hotels will be looking at closely and if clients haven’t reached their 2011 targets, it could mean hotels may increase prices to make up for lost ground.”
FCm recommends companies starting the hotel contracting process:
- review their 2011 year-to-date hotel production reports and ensure hotel volume commitments are being met
- look for leakage in their hotel program and identify reasons for booking outside of policy
- review their travel policy in regards to hotel bookings
- commence their 2012 hotel negotiations in July/August to get in early
- ask your FCm account manager about best practices for hotel contracting
David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
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