Hotel RFPs in 2021: Creating Opportunities in a Chaotic Environment

COVID-19 continues to rage across the US and the world. New spikes in cases have demonstrated that the future remains incredibly uncertain, particularly for hotel travel buyers and suppliers. The traditional hotel RFP season is upon us, yet buyers lack meaningful guidance as they make decisions regarding pricing strategy. On one hand, there is no easy way to forecast organizational demand for 2021. On the other hand, market rates will be extremely buyer-friendly with some forecasts predicting average rates dropping by as much as 25%. (Airoldi, BTN, September 2020) In a recent article from Business Travel News, HotelConnex VP of business development and client solutions, David Marcus, stated, “Even with suppressed demand likely to continue into next year, rates will not be following the usual buyer's or seller's market dynamics. As demand rebounds in certain markets, some hotels there will remain closed, and others will operate at limited capacity due to social distancing requirements and possibly staffing constraints due to financial considerations. As such, demand could outpace supply in those markets. Hotels also might be looking to recover costs from investments made in new sanitization equipment and protocols.” (Marcus, BTN, June 2020)

Hoteliers are Eager for New Business

While several industry groups, including GBTA, have called for rolling over 2020 rates into 2021, partly to address pricing volatility, there remain undeniable opportunities for savvy buyers to take advantage of current marketplace conditions at the negotiating table, particularly with independent hotels, or individual chain properties. Hoteliers at this level are keener than ever to bring guests into their rooms through strategic partnerships and aggressive pricing. Beyond pricing, buyers should demand more from their hotel partners. In a virtual webinar hosted by leading meeting software platform, CVent, Deborah Ryan-Pelletier, Manager Global Hotel Program Strategic Sourcing at ADP, stated, “It’s in everyone’s best interest to send out an RFP this year because of several factors: Duty of Care, Data Capture, and COVID-19 safety procedures from properties.” CI Azumano Business Travel believes that while these are important factors to include, they should be table stakes. The rate, and what is included in that rate, remain the most important factor to consider. That could include things like complimentary breakfast or parking. It is also critical that you get assurance that if the best available rate (BAR) is lower at the date of check-in, you get that lower rate along with your pre-negotiated amenities.

Also, consider these tips as you move forward with your negotiations:

1. Reduce the total amount of suppliers in your portfolio to maximize your negotiating power.

2. Include dynamic and static rates

3. Secure assurances that your rate and amenities will be protected against any lower rates offered by the hotel at check-in.

4. Strengthen your corporate travel policies and work to get executive leadership to mandate or at least encourage employees to book only with your preferred hotel partners.

5. Treat the hotel partners you select with respect, and with the promise that a strong relationship now will mean more business for them in the future.