A robust corporate travel policy and a good spread of hotel 
partners to keep options flexible will help travel and event managers maintain a balanced relationship with the new mega hotel companies. By Karen Yue
As with all changes, the recent mergers of global hotel operators – AccorHotels with FRHI Holdings and Marriott International with Starwood Hotels & Resorts – were met with trepidation among travel and event managers.
Although it is still early days and the full impact of the hotel consolidation on corporate travel and events is still unknown, reduced competition resulting from so many brands now residing under two giants has emerged as a top concern among travel and event managers.
ACTE Global regional director, Asia, Benson Tang, remarked that hotels may now hold back discounts and value-adds such as free use of the executive lounge and airport transfers.
HRS managing director for Asia-Pacific, Todd Arthur, said travel managers and meeting planners need only to look at the airlines industry to see how things might fare for them in the near future.
Arthur said: “Every merger in recent history has resulted in reduced competition. When the 2008 financial crisis hit, airlines in the US pushed for consolidation to stay afloat. There are now four major airlines (in the region) that make up 80 per cent of content and they are able to get real tough on pricing. The same may occur in the hotel space.”
To understand the impact on corporate travel, ACTE will have a session on this topic during the ACTE Global Conference in Beijing this August.
No loss of negotiation power
But not all travel and event managers are panicky over what might come.
Scott Brennan, executive vice president and head of Global Supplier Management with Carlson Wagonlit Travel, said travel managers and meeting planners can benefit from the broader footprint formed as a result of giant hotel operators coming together.
“(The mergers) should provide (the hotel companies) the ability to work on larger global contracts, which benefits travel management companies and travel managers of multinational companies. If done well, business travellers can expect and receive a more consistent service offering across a wider footprint of properties,” he elaborated.
Brennan does not think buyers will lose negotiation power at the table, as the consolidation is of brands managing the room supply and not of supply.
“Given the dynamics of the hotel industry, with the majority of properties owned by third parties, the brands will need to continue to deliver guests and events, or risk having their properties changed to other brands,” he reasoned.
Marina Krechetnikova, administration director with leading tobacco company JTI Russia, agrees, saying: “I foresee greater ability to negotiate better contracts for my company, as we can consolidate our large booking volumes under fewer hotel companies and demand better rates and perks. We can also earn more points faster under fewer loyalty programmes.”
HRS’ Arthur pointed out that “while (these companies) have a lot of rooms as a result of the mergers, they still represent a fraction of the content in the marketplace. In some Asia-Pacific markets, the big chains only make up single-digit marketshare”. As such, travel and event managers should still retain their bargaining power when dealing with the new hotel giants.
Unlikely impact on quality
Another common worry is the possibility of compromised product and service quality at the hotel level as mega parent companies trade precise ground control for the power of volume and reach.
Unilever’s regional travel head for Asia-Pacific, Geetha Arekal, disagrees. In fact, she believes that the mergers will lead new parent companies to shake things up across properties of newly acquired brands to ensure all are operating on the same high level.
Focus on needs, compliance
Existing competition in the marketplace is expected to help keep in check mammoth chains’ ability to charge premium prices.
“I expect independent hotels to jump at this opportunity to better engage their corporate clients (to show that they are more flexible and agile in responding to clients’ needs),” opined Arthur.
Brennan advised travel managers and travel management companies “to work with competing brands and properties to maintain negotiating leverage”.
He also urged travel and event managers to “focus on what is uniquely required for their clients and business needs” and allow for flexibilty in choices.
He said: “Looking at multiple brands is an option when contracting smaller meetings or travel programmes. Always having at least two or three hotels in the destination will ensure the offer remains competitive.”
Having a robust travel policy helps too, said Arthur.
“To know if mergers are costing companies more money (as a result of higher prices being commanded by hotel groups in power), travel managers must understand their spend through good data. Good data cannot be collected when bookings are fragmented and compliance with policy is absent.”
Ian Evasco, retail team leader – travel products, Adventure International Tour.
