GBTA’s Hotel Rate Freeze Advice Ignites Controversy

The Global Business Travel Association is endorsing a postponement of the 2020 hotel request-for-proposals process until 2021 due to the coronavirus pandemic, and “encourages hotels to roll all 2020 rates for 2021.” The response in the business travel industry has been mixed, especially because, according to several experts, rolling hotel rates over could erode the value of the corporate travel program.

GBTA normally does not get involved in the hotel RFP process other than providing a template of suggested questions buyers can ask suppliers, but “we made a special exception this year … [and] got involved at the request of top travel buyers and the top 50 hotel brands,” said GBTA CEO Scott Solombrino in the announcement. “With so many people furloughed or laid off, and with so much uncertainty about when travel can truly restart, buyers and sellers have neither the resources nor the knowledge right now to develop a mutually beneficial hotel RFP.”

While no one BTN spoke with for this report disagreed that the travel and hotel environment is challenged at the moment, some thought GBTA’s announcement was premature given that the typical RFP season doesn’t get going until August or September, when the hotel landscape might look different. Some also noted that GBTA is not an advisory organization.  

“I think the intent was they are trying to be helpful, but there are people raising different theories on their intent,” said Laura Kusto, senior director and global hotel practice lead for Advito and Stay by BCD Travel, which on Thursday issued a statement that while it agrees with some of the opinions expressed by GBTA, it does not support the recommendation to freeze rates into 2021. “We see another path that offers a lot more flexibility to take more of an active approach to managing programs coming out of this. The [GBTA] statement doesn’t allow companies any flexibility in taking ownership of their programs,” Kusto said.

Program Erosion?

According to several experts, rolling hotel rates over could erode the value of the corporate travel program.

“GBTA needs to support their members, but I’m really struggling with what they are saying. We need to give buyers a choice,” said Areka Consulting managing partner for the Americas Louise Miller, who voiced concern about program credibility given that static negotiated rates very likely will be higher than spot rates in the market going into next year. 

“Hotel attachment is barely 55 percent in the U.S. and barely 25 percent in the rest of the world,” Miller said. “If you roll over your rates, where you have static rates, there is a very good chance they will look high a lot of the time. That’s putting the [program manager and the travel management company] in a bad situation. When travelers see lower rates in the online booking tool, they’ll say, ‘I can’t trust the TMC, I can’t trust the program, I beat the rates every time.’ It sends the wrong message.”

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