Mastering Hotel Sourcing: 5 tips for a successful data-driven strategy

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Mastering Hotel Sourcing: 5 tips for a successful data-driven strategy

By Alicia Olson, Director, Customer Success

If you’re looking to source your calendar-year preferred hotel program, it’s time to start building your strategy for 2025 now.

It’s important to take the time to review your data and understand your organization’s travel footprint, how your traveler’s book, identify whether your current year rates are competitive, and see if the hotels in your program meet your company’s needs.

Many travel managers may simply look at their current hotel program and think things are working great, so why bring new hotels into the mix? By following this strategy, you could be leaving money on the table, supporting hotel partners that do NOT offer competitive rates at the time of booking or unknowingly including hotels that don’t meet your traveler’s needs.

We’ll explore key metrics that you should consider before launching your hotel RFP and dive into how to drive greater efficiencies throughout the process. In our previous blog about the five essential strategies to incorporate into your 2025 hotel sourcing approach Eric discussed the value of going beyond traditional sourcing methods and taking a look at rate availability performance, sustainability metrics, and reducing & diversifying your hotel program to save you time and energy in the overall process. Let’s dive deeper to understand why these are important factors when selecting which hotels to include in your preferred program:

1. Use the right data sources

When deciding on which data sources to use, be sure to use a minimum of six months of data, preferably twelve months, to mirror a full-year travel cycle. Sales and budget cycles, meetings and holidays can influence your annual travel patterns, so annualizing partial year data may not accurately reflect your program. By pulling data from the previous 12 months, you will have a much more robust and complete data set to review your travel patterns.

2. Evaluate rate availability

The top 10% of your hotels typically make up about 65% of your overall hotel spend and room night volume, so these are the hotels that must perform well when it comes to saving your company money and keeping your travelers happy. Rate availability is the practice of ensuring the corporate negotiated rate set during the sourcing process is, in fact, available for your travelers to book on a consistent basis. Through Dynamic Performance Management (DPM), Advito shops hotels throughout the entire year to make sure that hotels keep your negotiated rate available. Through years of data collection, we found that corporate negotiated rates are only available about 70% of the time. This means nearly one-third of the year, the rate you just negotiated is not available for your travelers to book, even if it is Last Room Availability (LRA). Any preferred hotel where your rate is unavailable month after month would warrant a conversation and potential exclusion from the program.

3. Calculate your average booked rate

Use key data, like room night volume and hotel spend, to calculate your average booked rate (ABR), or what the traveler actually ended up paying at the hotel and compare that value with your corporate negotiated rate (CNR) at that same hotel. It can be eye-opening to learn that you may be paying well above your corporate negotiated rate at some of your top volume hotels. There certainly will be periods of compression in any market where the CNR will not be available, but it should be available at least 80% of the time. If your ABR is more than 5-10% higher than CNR on average, this means the hotel is either not making your CNR available OR you may need to request more inventory at that property in order to keep them in the program. Sourcing a hotel program is a time-consuming and high-effort process, so it’s crucial that the rates you’ve negotiated are made available for your travelers to book.

4. Understand your discount off the best available rate

Additionally, it is important to understand your effective discount off the best available rate (BAR) when negotiating to ensure the volume of room nights and spend you are bringing to a particular hotel or market is in line with the discount being offered. You can calculate your effective discount by taking BAR less your negotiated rate, divided by your negotiated rate (BAR-CNR/CNR). More volume typically means a greater discount from the hotel. The best practice is to negotiate one preferred hotel per 500-1000 room nights in a market as a starting point, but this will vary by client and market size. It’s also best to consider consolidating volume into fewer hotels to drive more leverage but be thoughtful on how much volume you push to each hotel. You want it to be high enough that it gives you buying power, but low enough that the hotel is willing to give you inventory at discounted rates. This can be challenging for smaller hotels and properties in remote locations.

5. Leverage accurate market projections

Lastly, as Eric mentioned in our previous blog post, it is important to leverage additional reporting that provides accurate market projections, like the Advito Quarterly Travel Price Index. Sources like this should drive your decisions and help you understand if a hotel’s annual increase is in line with hotel industry pricing for that particular location. While we are beyond the pandemic now, we still see market volatility around the globe. By taking the time to review which markets are seeing high demand in the coming month or year, you can be prepared for some higher rate increases and share this intel with leadership. It also helps to know which markets may have had high demand in the past which is now slowing. You may be able to capitalize on year-over-yearrate reductions in these markets. There are many sources which provide these projections around the time of the traditional sourcing season in later Q3 or early Q4. However, if you make the strategic shift to an off-cycle program, you will need consistent projections to review, and Advito is here to help.

By taking the time to review not only your spend and room night volume at historical hotels, but also focusing on the discount you should be getting and rate availability, you will set yourself up for success in the coming year. Our hotel sourcing experts have the ability to pull all of these important data points together, provide insights to drive savings and even further optimize your program giving you back valuable time in your day.

Ready to talk to an expert and start sourcing a competitive program? Contact us today.

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