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by Michael J. Shapiro | September 01, 2016

"Stop clicking around!" commanded Hilton, in a recent media blitz to stress the benefits of booking directly with the hotel company. "It pays to book direct," confirmed Marriott, in a marketing campaign of its own. Shortly thereafter, InterContinental, Hyatt, Wyndham and Choice were promising the lowest guaranteed rates to loyalty-club members who booked directly through hotel company channels.

Such campaigns have become increasingly aggressive and ubiquitous in the marketplace. Hotel companies are vying for more customer data and pushing back against the market leverage of third parties like Expedia, to which they pay commissions as high as 15 percent on rooms booked.

But the promotions, while clearly targeted at individual leisure travelers, have some industry pundits wondering if there could be ramifications for the group and meetings market.

"Simply put, many travel buyers are finding these promotional rates are lower than what they've negotiated elsewhere," says Bjorn Hanson, Ph.D., based on his interviews with corporate travel managers and planners. Hanson, clinical professor at the Jonathan M. Tisch Center for Hospitality and Tourism at the NYU School of Professional Studies, conducts a wealth of interviews every year for his annual report on the state of corporate hotel negotiations. He's careful to point out that his observations thus far are more anecdotal than statistically significant; still, he sees growing levels of concern in the marketplace.

"Travel buyers want to be shown via pricing that they still represent important business," Hanson says. "This concern is among the more significant changes I'm seeing in all the research."


Undoing the deal?
Of course, hotel companies do value meetings business, concur executives from every lodging provider who responded to queries. "From the beginning of the planning process, Hilton collaborates with meeting and event professionals to identify specific needs and requests, including negotiated group rates, and works to ensure their attendees receive the best value for the collective group's needs," says Andrew Flack, vice president of marketing and e-commerce for the Americas at Hilton Worldwide.

Still, Flack doesn't guarantee that planners' rates won't be undercut. "The Hilton HHonors member discount is similar to other individual promotions or packages offered, in that the group rates could be higher or lower," he says. "Those who book with the group will receive the negotiated group rate, and those who book directly will get the Hilton HHonors individual member discount."

Flack emphasizes that Hilton works with planners to ensure HHonors members receive their benefits whether they book directly or not, and the direct-booking promotion is "no different than other individual promotions or packages." Bookings made directly with the hotel, however, would not necessarily be counted toward fulfillment of the contracted group room block.

 

Marty Balogh
Associate Executive Director
Meetings & Travel
American Bar Association

Seasoned meeting professionals understand that negotiations involve a wide range of logistics and concessions beyond room rate, but they are equally sensitive to the bottom-line perceptions of attendees and clients who might focus solely on rate.

"It all comes down to the rate that is being offered, and what the restrictions are," says Marty Balogh, associate executive director of the meetings and travel group at the Chicago-based American Bar Association. "If the group rate is lower, then I don't think many planners will have a problem with hotels trying to change the buyer pattern from sources such as the online travel agencies and other third parties. If they are going to undercut the group rate, then yes, it is a problem and planners will, at minimum, demand credit for every room sold outside of their official channel. It also devalues what meeting planners do in the eyes of their registrants and organizations," notes Balogh.

If direct-booking rates are lower but carry with them a number of restrictions -- steep cancellation fees, for instance, or full payment in advance -- that may or may not create friction with planners. "In that case it will depend on the type of group that's meeting and whether their attendees require flexibility," Balogh adds.