Hotel pricing is undergoing its biggest upheaval in decades as travel management companies face pressure to accept dynamic corporate rates.
Revenue managers from outside the sector are displacing traditional sales and marketing departments and often see little value in relations with TMCs, according to hotel technology consultant John Burns.
He told the GTMC conference that best available rates (BARs) would increasingly replace the existing tiers of corporate rates and present a massive challenge to TMCs. A best available rate represents what is best for the hotel not the client, said Burns. “BAR means the right rate [for the hotel] in the right channel for the right duration.
“A new class of revenue managers are setting rates who do not have to understand the hotel business and are largely unaware of longstanding relationships. It is terribly disruptive and a lot of people in the hotel industry are not happy about it. It could also be a substantial disadvantage to TMCs.”
Burns warned: “This is the most significant event in hotel operating in 50 years – it is re-shaping hotel organisations.” He added that hotel groups would seek to make corporate rates dynamic so they change with demand and availability.
However, he suggested the unfolding recession in the US would give TMCs a chance to show their importance. “It is vital you understand this,” he told guild members. “From the revenue management perspective, everything is up for negotiation.
“You need to say, ‘The concessions [we have] are in place for a reason. We are partners through good and bad, but we cannot have unstable pricing.'” However, he warned it may take several years for revenue managers to appreciate the point.