NEW YORK -- While hotels might be expected to negotiate 2002 rates
aggressively in a soft market, there won't be much change from the
negotiated rates for 2001, according to corporate travel consortia.
Alfred Luthy, vice president of hotel programs for Hickory
Travel Systems, said hotels need to be conservative when submitting
rates because if they're too aggressive, they will regret it when
occupancy rates increase.
"Most hotels are lowering rates for hotel programs only
slightly," Luthy said. "In the consortium market, you can always
lower the rates, but you can't raise them."
John Melchior, interim managing director for Radius, also hasn't
seen significant rate reductions in hotel directories.
"Obviously, the hotels don't want to commit to rates that are
too low," Melchior said.
However, there are promotional rates in the marketplace that are
significantly lower than directory prices, said Melchior, and it's
the consortia's challenge to highlight those rates for travel
agents at the point of sale.
"This is the time we have to go out and promote," Melchior said.
"We're working very closely with hotels and see this as an
opportunity to prove to vendors that we can do something for
them."
Melchior said it's important to advertise promotions to agency
members on Radius' intranet and to highlight promotional rates in
the CRS.
Luthy estimates that it costs individual hotel properties $5,000
annually to list rates in the most prominent corporate travel
directories, of which there are about 15. Even though hotels are
struggling, not one hotel listed in the 2001 directory declined to
participate in Hickory's 2002 program, Luthy said.
"We had a very good submission," Luthy said. "About 500 to 1,000
more hotels than last year submitted for the program."
Luthy admitted that an August closing date for submission of
rates proved to be a boon.
"If the closing date was after Sept. 11, who knows?" Luthy
said.
As far as direct negotiations with corporations, both hotels and
their clients are taking a cautious approach, said Cheryl
Hutchinson, travel manager at American Management Systems in
Fairfax, Va., a company that runs a corporate travel department and
only outsources 24-hour service.
"Companies don't know what their numbers are going to be," said
Hutchinson. "There are situations you can't predict."
When discussing their company's outlook for travel with
suppliers, Hutchinson recommends that travel managers arm
themselves with knowledge about the company's financial
prospects.
"It takes research," Hutchinson said. "Historically, travel
managers weren't in touch with business groups or financial
development," Hutchinson said. "Now that you have different
economic conditions, it's important for travel managers to become
more in touch with their companies and design programs
accordingly.
"If you don't, you're going to let down your suppliers and set
yourself up for disappointment."
Hutchinson said American Management Systems often negotiates
with suppliers year-round, revisiting two- and three-year contracts
to make sure the companies are hitting their marks.