Mr. Currie

Sales & Marketing

Who Owns the Business Traveler Hotel Booking Experience?

By Joe Currie, District Sales Manager, Egencia

Who is in Control?

In the leisure world, the role of an organization such as Expedia or a hotel property website is to inspire a traveler towards the purchase path. The current business travel hotel booking experience includes influences from a variety of sources, from travel managers and TMCs to hotel properties and personal recommendations. In order to take ownership of these hotel booking decisions, business travel technologies should be focused on providing the value of a curated and personalized transactional experience that will keep a property occupied Monday - Thursday of every business week.

Is Brand Loyalty a Dead Concept?

The 2016 report, Traveler Friction: Insights from U.S. Road Warriors indicated that the average road warrior takes 26 business trips per year, and spends 86 nights away from home.(1) In the past, the idea of seeing the same person at the check in counter, ready to provide the same room, at the same hotel, in the same city every two weeks for a year, was appealing to many travelers. However, today's world of business travel and hotel booking is being influenced in different ways. Between the ongoing movement towards organizational globalization, the increasingly evident demographical changes of the business traveler, and the influential technologies available in the leisure marketplace, business travel hotel booking is shifting accordingly.

A 2017 Harvard Business Review discussion on globalization illustrates the global shift stating, 'Back in the 1980's General Electric earned 80% of its revenue within the United States. Today, GE earns more than 70% outside the US'(2). With this shift in customer base carrying over to the business travel world, it is more likely that the formerly clockwork trip to the same domestic city is now going to transition to include international destinations. This shift results in the increased chances that a traveler will begin to sacrifice brand loyalty in an unfamiliar city, instead gravitating towards what is convenient and reliable based upon the suggestions of others.

The road warriors of the past, those generations dedicated not only to their career, but also to their company and the brands they are familiar with, are being rapidly replaced by Millennial workers. The Bureau of Labor Statistics predicted that Millennials (arguably those born between 1984 and 2004) would make up the majority of the workforce by the end of 2015. According to Forbes, Millennial workers are very growth focused and the average length of time spent at each company maxes out at two years, in contrast to five years for Gen Xers and seven years for Baby Boomers.(3) With the bulk of the workforce maintaining a much shorter relationship with their employer, it is not surprising that brand loyalty is often sacrificed. For the Millennial business traveler, perks offered by being a valued customer often pale in comparison to the experiences and up-to-date amenities that competing brands can provide.

A March 2016 article from travel consultant firm nSight for Travel states, 'For the travel industry to be successful long term, it needs to understand the millennial first.' The article goes on to explain how a travel provider needs to understand that 76% of the younger generation of business travelers trust the opinion of their friends over a travel agent, 49% use smart phones when planning trips, and 55% will not book a hotel room without Wi-Fi. For this emerging demographic, there is a desire to immerse themselves in foreign places they visit, and they have grown up with the "pay for more" approach to travel.(4) As a result, the notion of shelling out for extra leg room or additional features that make their experience more beneficial begin to take center stage over the potential benefits of brand loyalty. Beyond globalization and demographics, a third factor guiding market conditions for business travel hotel booking is a result of the speed at which leisure travel technologies are evolving. Looking back a mere 30 years, a leisure hotel booking used to include 20 minutes of your time on the phone with a travel agent, numerous lines of computer code being inputted into the GDS, an output printed on a satellite printer, and five business days for your confirmation to arrive via mail. In today's leisure travel market, the same process can be completed within three minutes on Hotels.com from your mobile device.

Leisure travel technology has adapted at an exponential pace, not just in ease of use, but also in content and offerings. Companies such as Expedia and Booking.com are utilizing the changing priorities of leisure travelers. From catchy marketing jingles or sexy spokespeople to seamless integrated hotel booking experiences across multiple devices, companies are heavily investing in the best way to capture a hotel transaction. Hotel brands as well as organizations such as Expedia have developed test centers tracking eye movements, heart rate, and other physical and mental monitors dedicated towards what will inspire you to make a decision while leading to the quickest purchase path.

Gone are the days when a concierge-level room and free breakfast are the biggest draws, instead experiences are catching travelers' eyes and the companies who are building experiences into their technology are the ones who are most successful in drawing in the customers. This progression of leisure technologies is now catching up on the business side, leading travelers to seek out other resources to be sure they are making the most of their travel time, and often leaving behind the loyalty they once held to a specific brand. Ultimately, people are going to go with decisions based upon the information that is most accessible to them while presented in a way that is going to motivate them to take action. If a specific hotel brand cannot keep up with the features that are most beneficial for their clients during the booking of a trip, why should they consider staying there?

How does Alternative Lodging Fit in?

The concept of shared economy services initially exploded onto the travel scene with rideshare providers. Uber and Lyft serve as an alternative to taxis or car rentals, and a similar trend also applies to hotels with Airbnb, HomeAway, and extended stays for business travel. An August 2016 Phocuswright publication states "Airbnb is likely to be the fourth-largest online travel intermediary overall by year-end."(5) This development, combined with the 2015 acquisition of HomeAway by Expedia, Inc., are indicators that these types of alternative lodging are most certainly here to stay. While organizations are still wrapping their heads around the best way these components fit within their individual travel policy, factors such as savings, traveler friction and a changing traveler culture are contributing to the rise of alternative lodging, as opposed to traditional hotel accommodations, for business travelers.

Forbes mentions, 'Corporate hotel rates are projected to increase in 2017, driven by tight supply in several key North American markets' with hotel construction 'lagging behind' in many major cities.(6) The increased demand in existing markets, coupled with stagnant growth in availability, leads to an increase in compression nights or highly profitable nights for each property. However, as suggested in a January 2017 Business Travel News article, compression rates, "fell 17 percent year over year among the 25 U.S. markets with the most hotel rooms, the first time that's happened since 2009."(7) This slump in rates appears to correlate with the rise of alternative lodging options. Simply put, if you are a business traveler who does a search for an uptown hotel and see an out of policy $275/night hotel room versus $175/night for an entire apartment or home, what would you select? Increased space and a lower price is a powerful draw for many business travelers, and the more these options are offered through integrated travel platforms, the more popular they will become.

An additional component leading to alternative lodging is a business traveler's general frustration with hotels alongside the Millennial cultural shift in traveler perspective. According to data within "Traveler Friction: Insights From U.S. Road Warriors", sources cited the ability to choose more comfortable hotels in policy as a primary cause of traveler friction.(8) Furthermore Skift reported, 'millennials, who travel the most, report that traveling for work has a more negative affect on their family life than other age groups."(9) These combining factors may gradually nudge the business traveler towards a homier alternative lodging experience versus a hotel room number.

Communication, Content, or Customizing, What Will Lead the Way?

In the end, the corporate client is the one who has the final say with business travelers. However, it is the job of their hotel booking technologies to truly assist an organization to know and own their travelers. As the different trends and alternative avenues of lodging continue to infiltrate the leisure marketplace, business travel technologies demand methods of communication, and optics via curated rates with full content accessibility, as well as customized traveler booking experiences to keep pace.

Whether it be one touch mobile agent assistance features or the ability to demonstrate policy value of a hotel selection, communication via your hotel booking technology is essential to a business program's future success. A November 2016 GBTA release indicates that there is a 20-30% gap between what travel managers think their travelers are booking, and what is actually booked. Additionally, 'one in five' travelers do not receive relevant travel alerts or notifications impacting their travel, likely resulting in frustrating travel situations.(10) Subsequently, it is the duty of a business travel hotel booking tool to find new ways to engage a traveler as a trusted resource.

A way to utilize the traveler as a resource is via data. Data is everywhere. The existence of deeper diving 'Big Data' tools will help a client to understand traveler behavior and use alternative communication data points working to become more of a business traveler resource. A Business Travel News whitepaper mentions, 'While suppliers seek ways to use the new technology trend to boost revenues, enhance service or reduce expenses, travel managers want to know how it might solve some of their challenges.'(11) The future of hotel booking tools will not only provide post trip visibility into behaviors, but translate the information into pre-trip communication tools that will benefit their traveler experiences throughout their journey as well.

Secondly, supply content is the equivalent of trust to the business traveler. While a price aware leisure traveler may have the time and patience to search up to 10 different websites before making a final selection, a business traveler must be able to trust their solution from their first search. If they do not find what they need from their company designated location without firm organizational repercussion for choosing an outside alternative, trust becomes an almost unrepairable concept in the eyes of that traveler. Furthermore, the hourly cost of a traveler searching multiple websites exponentially increases by the amount of time dedicated to their searches detracting from the original savings opportunity trying to be achieved.

Finally, test, learn and adapt is the mantra behind the concepts that will continue to provide the most personalized booking experiences; translating into the business traveler hotel transaction. While true personalization may be considered the Holy Grail of business travel booking, companies are coming closer than ever on the leisure side. Current leisure technology provides resources that identify travelers' individual preferences, spending patterns and past behaviors. As leisure companies like Expedia integrate these personalized hotel search preferences within a multi-device Scratchpad environment, it is not surprising that the business traveler is growing to expect the same. In order to take ownership of the hotel booking experience, it is now up to the business travel technologies to continue to deliver on these expectations.

Ownership over the hotel booking experience for the business travel remains in flux, and the traveler, the hotel customer, makes the final choice. Steve Jobs once said, "Get closer than ever to your customers. So close, in fact, that you tell them what they need well before they realize it themselves." It is this closeness, an understanding of the balance between wants vs. needs, loyalty vs. innovation, cost saving vs. enhanced experience that will ultimately produce a true "owner" of these hotel bookings.

References:

(1) ARC, tClara, American Express GBT, "Traveler Friction Insights From U.S. Road Warriors" Survey, May 2016, Accessed April 26, 2017.
(2) Harvard Business Review, "Globalization: Myth and Reality" HBR IdeaCast, February 24, 2017, Accessed April 26, 2017.
(3) Jeff Fromm, "Millennials in the Workforce: They Don't Need Trophies But They Want Reinforcement", Forbes, November 6, 2015, Accessed April 26, 2017.
(4) nSight For Travel, "10 Things You Need to Know About Millennial Travelers", Last Modified March 18, 2016, Accessed April 26, 2017.
(5) Douglas Quinby, "The End of Alternative Accommodation: Airbnb is Now the Third-Largest Online Accommodation Seller Worldwide", Phocuswright, August 2016, Accessed April 26, 2017.
(6) Lea Lane, "What Business Travelers Can Expect in Air and Hotel Costs in 2017" Forbes, January 8, 2017, Accessed April 26,2017.
(7) Julie Sickel, "Airbnb's Influence on Hotel Occupancy Threatens Industry Profits", Business Travel News, January 10, 2017, Accessed April 26, 2017.
(8) ARC, tClara, American Express GBT, "Traveler Friction Insights From U.S. Road Warriors" Survey, May 2016, Accessed April 26, 2017.
(9) Andrew Scheivachman, "Millennials Are Now the Most Frequent Business Travelers", Skift, October 27, 2016, Accessed April 26, 2017.
(10) Global Business Travel Association Press Release, November 15, 2016, Accessed April 26, 2017.
(11) Business Travel News Whitepaper, "Big Data: Current and Coming Impact on Travel and Travel Management", Business Travel News, Accessed April 26, 2017.

Joe Currie has more than 20 years of experience in the corporate travel world. He grew up learning from his parents, who owned a global corporate travel agency. As a child he learned the ins and outs of the industry over the dinner table. After working for Total Travel Management/Global Experts in Travel, he took a hiatus from travel to explore writing. For several years he worked in Los Angeles before returning to the world of travel. Mr. Currie has held numerous positions with Egencia, an Expedia, Inc. Company. At Egencia, Mr. Currie is a District Sales Manager for the Southeast Region. Mr. Currie can be contacted at 919-225-8094 or jcurrie@egencia.com Please visit http://www.egencia.com for more information. Extended Bio...

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