COVID-19 and Managed Hotel Programs: Update your OBT & add Rate Targets

How do you fix this? When business travel resumes, there will not be time to renegotiate and load new rates prior to travelers booking their first trips. And as much as you would like, you can’t get ahead of this by renegotiating those rates now. Many hotels are closed, and those that are open are laser-focused on securing the safety of their immediate guests. On top of that, what rate would you ask for? Rates have dropped but the situation is far from stable. It’s too soon to tell what a competitive rate will be.

If you don’t know what to negotiate and hotels don’t have the bandwidth to negotiate, what do you do to address non-competitive static rates in the online booking tool?

It’s simple – leave the rates but change the settings. Online booking tools vary in their ability to adjust settings, but most follow similar protocols. What needs to be adjusted now to ensure non-competitive static rates don’t draw extra attention is a basic adjustment of the sort settings.

1. First, any property exclusions need to be made. If you want travelers to avoid economy and luxury brands, for example, those can simply be excluded from the search results and it is a common practice to do so.
2. Next, the first preference in sort order should always be on location. By setting location first, you will ensure that the hotels that appear are located close to where your traveler actually wants to stay. No one likes being given options near the airport when their three-day meeting is downtown.
3. Then, policy aspects are prioritized as the third step. Policy aspects include items related to cancellation policies and pre-payment, allowable room types and global locations where you don’t allow travel for safety reasons. Policy also includes rate caps so if you have those configured, any hotel rates that exceed the cap will be identified by the OBT as out of policy.
4. After that, set the next preference to price. In doing this, you will ensure that hotel results appear in order of best price first. But then after that, when your travelers click into the property to review the room types, those rates will also be sorted on price. In doing this, those static rates that are higher than standard rates right now will still show – along with the hotels preferred designation – but your travelers will see the lower, standard rates first.
5. Last, if you sort on preferred, that is where this element belongs. Normally – and if you’ve sourced competitive rates – the preferred rates are the lowest. But by putting it last – now in this environment as well as in any environment – you’re guaranteeing that the lowest rate a hotel offers is what your travelers see first.

Taking these few simple steps will ensure the first rates your travelers see are competitive – driving trust in your travel brand and hotel program. It will give your booking tool credibility across your traveler base and that credibility will drive compliance – and more importantly – duty of care.

Configure Market Rate Targets in your OBTs

In addition to changing some basic settings in your online booking tools to create a positive experience for your travelers, it’s also crucial to ensure you can drive smart buying decisions. And with static rates now priced higher than standard, what can you do to ensure the rates travelers are booking really are the best available?

You can implement market rate targets.

Market rate targets ensure travelers make smart buying decisions. They give travelers a guideline on how much they should be spending when booking a hotel, are set individually by city/market, and appear in the search results. Travelers search for a hotel, see the rate target and determine if the price of each hotel is suitable based on if it comes in at or below the rate target.

You may be asking yourself – is this the same as a rate cap? (We get this question a lot!) But no, rate targets are very different than rate caps. Rate targets present the traveler with a competitive rate and encourage booking at or below that rate. Rate caps present the traveler with the maximum value acceptable. Both targets and caps serve as anchors in deciding what hotel rate to book. When travelers are anchored to lower, competitive values, they book better rates and save money. (If you want to learn more about anchors and how they work – check out this video.)

Within our hotel consulting practice, we work with our clients to set market rate targets every day. First, we evaluate the performance of their historical booked rates in each market. Were they competitive with respect to the best available rate (BAR) at the time? Next, we evaluate how much those BAR rates have changed. In light of COVID-19, we have been seeing significant decline in these rates. Finally, we determine what we want travelers to be booking and set the market rate target to that value. That target is then configured within the online booking tool and guides travelers to making those smart buying decisions we all want.

Because market rate targets anchor travelers to a competitive rate – instead of a maximum allowable rate like a cap – the travelers book lower rates. It really is that simple. And in the era of post-COVID-19 travel, when you have so many concerns on your mind, you need simple. You can configure market rate targets now, and they will give you the coverage you need to ensure travelers are booking the best hotel prices as soon as booking resumes.

Read more about our overall strategy for Post-COVID-19 Hotel Category Management in the first post of our deep-dive series. Part Two: Devise your Health, Safety and Duty of Care Strategy is out now.