HOTELS
HILTON IS ALLOWING CONSUMERS AND CORPORATE TRAVELLERS THE
OPTION TO PAY FOR WHAT THEY WANT
pricing policy there is a concern that the flexibility to change bookings without charge could see prices rise.” However, Hilton’s pricing revamp has received guarded backing from some in the hotel sector – as with many in the industry, they too must compete with growing dominance of the OTAs. “Hilton and other companies tightening their cancellation policies may not endear themselves to consumers, but it’s crucial to remain competitive in a complex distribution landscape with OTAs looking to undercut hotels,” says Marco Ben- venuti, co-founder and chief strategy officer for Duetto. “By offering different prices for different cancellation and refund policies, Hilton is allowing consumers and corporate travellers the option to pay for what they want,” he adds. “That’s the foundation of revenue man- agement and a first step to our open pricing philosophy that enables hotels to keep channels, segment and room types open and available at rates based on demand.” FCM Travel’s Newns adds that the choice of either fully flexible or less flexible rates based on need is quite common in rail and air, so why not hotels. “It is also likely that the overall strategy for Hilton will be to charge a premium to have the advantage of full flexibil- ity, offering travellers more choice but at a price.”
RFP ROLE QUESTIONED New hotel pricing models could also be seen as a reaction to some buyers and TMCs moving away from Request For Proposals in their buying programmes. Wesley Bergstrom, vice-president for global supplier relations, hotel value and revenue management, Amex GBT, says: “The current RFP process is cumbersome and does not always drive the best outcome. Optimising programmes and integration of more choice can help solve many of the issues with RFPs, including last room availability, black-out periods, value-added benefits for travellers and reducing the number of hotels used in an area.” Steve Fitz-Costa, business travel sales director at Accorhotels, meanwhile suggests RFPs are still viable, but shrinking: “Corporate buyers are now applying the detailed RFP process to a much smaller percentage of their hotel programme, so it’s essential we have a flexi- ble pricing structure… and as the technology develops, we will see a decline in volumes managed through RFP.”
110 SEPTEMBER/OCTOBER 2018
buyingbusinesstravel.com
DO CANCELLATION PENALTIES WORK?
In 2015, Marriott and Hilton introduced cancellation policies that imposed a penalty of one night’s charge if a pre-booked room was cancelled after 11.59pm on the day before planned arrival. However, it had a limited impact on cancellations. Revenue management company Duetto found an average of 16.4 cancellations per night in the first half of 2016 (analysing 1,000 US hotels). More of a worry for hotels, however, was the steady monthly increase from a low of 10.7 cancellations per night in March to a low of 12.7 per night in July. In June 2017, Marriott moved to a 48-hour can-
cellation policy for its hotels in the US and, in some places where demand was high, this was extended to 72 hours. For those hotels with a 48-hour policy, Marriott discovered cancellations were being made earlier than at a late stage and bookings went up. Marriott chief executive Arne Sorenson said few
hotel customers welcomed “incremental restrictions on flexible reservations… but I think most under- stand that we have a need to manage our inventory and avoid ‘walking people’.” In hotel jargon, “walking people” means being forced to relocate guests to other nearby hotels (if rooms are available) when their original accommodation is overbooked. Even so, a recent Business Travel Coalition poll
of 216 travel managers and TMC executives from a dozen countries found that 59 per cent would likely book away from Marriott as a result.
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