Hotel cost savings – visible and viable in Asia with HRS
While mergers and acquisitions in the hotel industry seem to be the tilting the balance of negotiation power in favour of mega hotel chains, HRS, the global hotel solutions provider, continues to deliver an average 9% year-on-year savings for its corporate clients.
Its proven end-to-end approach is based on three fundamentals: bundling volumes, renegotiating and auditing rates and introducing alternative hotel partners.
Emmanuel Ebray, Managing Director for Southeast Asia, India and South Korea, explains: “In the highly fragmented
hotel industry, mega chains often have greater mindshare than market share. The Global Distribution Systems (GDS) used by travel management companies capture but a fraction of the market. Consider that, in Asia Pacific, only 26,000 hotels are available via GDS. At HRS, we give our corporate clients access to that and another 140,000 independent hotels — that’s six times more and a total of 73% of market supply at their fingertips.”
Casting a wider net aligns the needs of the organisation such as cost savings, traveller satisfaction and duty of care with that of the business traveller (including hotel choice, room availability and ease of booking). But doing so in-house, Mr Ebray notes, may not be efficient for two main reasons. Firstly, it takes, on average, one full-time headcount to get through a single 800-hotel RFP exercise, which is a strain on lean procurement teams. Secondly, for procurement managers, the negotiation process with hotels typically involves committing a certain number of room nights in return for preferred rates. This puts smaller companies and companies with business travellers visiting a variety of destinations at a natural disadvantage.
HRS’ dedicated team takes on the hotel procurement and due diligence responsibilities of its 40,000 corporate clients worldwide, and this enables it to leverages the power of collective in bundling volumes and renegotiating customer-specific rates. After locking in preferred rates, HRS conducts a 360°rate audit and correction process to ensure that hotels submit accurate rates to its booking platform. Globally, one-fifth of all submitted rates are wrong, so the fully automated HRS Rate Protector tool is designed to contribute to significant avoidance savings. Among other things, the tool also ensures bookability — that after committing to HRS’ best buy rates, hotels follow through
with a reasonable room availability rate.
Markus Flamman, Head of Corporate Sourcing, Asia Pacific, adds: “We have no doubt that the hotel segment remains a category where significant savings can be made. There is vast potential for savings but the process is
a labour intensive one. Hotel sourcing through outsourcing takes the pain points away from companies and gives them more savings and more time to focus on what really matters. In a world where optimal cost performance is key, we partner companies so they get more with less.”