TMCs in the region are booking a low number of hotels

The Association of Corporate Travel Executives (ACTE) forum in Dubai tackled the topic of how to create a hotel programme in the Middle East, with issues of direct negotiations v intermediaries; and credit cards on the agenda

A recent report on the Middle East corporate travel sector by Chris Pouney, director, Business Travel, Severnside Consulting highlighted the minimal number of hotel bookings going through Travel Management Companies (TMCs) in the region: “GDS companies estimate that in Western Europe, for every 50 GDS-made passenger name record (PNR) for an air transaction, there is one hotel room night. For the Middle East this ratio is 1000:1”.

Pouney attributed this to the trend for booking hotels “via local relationships” in the Middle East. “Travel Managers despair as spend; volume and travel security data are not captured,” said Pouney. “Resistance at local level is driven by a variety of reasons: culturally it is seen as a hospitable gesture to book a guest’s room.

Bookers claim better rates are achieved locally, a claim refuted by the hotels. Additionally, non-preferred hotels have been known to offer incentives to local bookers to capture additional business. The majority of hotel bookings in this region are made via consolidators (Wholesalers, MCs). This buying pattern is often justified by the fact that agents have credit facilities in place,” added Pouney.

Rate parity / or disparity?
So why aren’t TMCs capturing their share of hotel bookings? Hoteliers present at ACTE forum were keen to defend their commitment to the best practice of ‘rate parity’ — whereby the hotel offers the same rate with the same conditions regardless of the distribution channels used for booking.

But TMCs asked “why shouldn’t they get a better deal in exchange for their services?” Jumeirah Group vice president sales Thomas Grundner stated: “Rate parity is the key to success — there should not be a different rate for TMCs and for a corporate if approached directly. It is a very important element for success. Rate is such a powerful element and we cannot go back and undo the good work that has been done over the last few years.”

Bassem Salam, director of revenue management, Accor argreed: “the key is rate parity. Hotels have to offer the same rates.”

But the forum highlighted the distrust and lack of transparency that exists in the market over hotel rate strategies. Forum participants questioned why they could often find cheaper rates through hotel consolidators online rather than booking direct through the hotel front desk.

Salem said: “In a hotel there are multiple levels of rate. There are fully restricted rates and best available rates. Someone on the front desk may not have realised they should have offered you the best available rate.”

Benjo Van Laarhaven, president, The Travel Consulting Group said “trust was the biggest problem” when it came to hotel rates.

“I wish I could have a session with hotel professionals on some of these definitions: RevPar, Last Minute Availability. What are they all about? Hotels have created an industry that is incredibly complex and they have benefited from that. But now the future is changing. By sharing and through education, we can improve the industry and create more trust.”