Hotel Online 
News for the Hospitality Executive

The Dance Between Corporate Travel Managers and Hotels
 Kicks into Full Swing; Bargaining Fiercer than Ever
By Suzanne Marta, The Dallas Morning News
Knight Ridder/Tribune Business News

Oct. 30, 2003 - Business travelers shouldn't be surprised if their company's travel manager soon sends them a detailed survey about their buying habits.

Travel managers nationwide are taking a closer look at booking data as they begin negotiating contracts for 2004.

The dance between corporate travel managers and hotels has kicked into full swing and will last until December. This year, the bargaining is fiercer than ever.

The last 2 1/2 have been a buyer's market for the nation's business community, with hotels eager to cut deals to gain bookings.

But with an economic recovery underway, travel managers fear that their ability to demand discounts is slipping away. At the same time, they're seeing little, if any, increase in their budgets.

Travel contracts are important to hotels because the deals attract bookings from business travelers, who typically spend more at hotels than vacationers and convention-goers. The contracts are less important to airlines, which revise their corporate offerings throughout the year.

But both hotels and airlines are testing how much pricing power they have gained in the nascent economic recovery.

"Both sides are walking on egg shells," said Larry Restiano, who heads American Express Corporate Travel Services' consulting team. "The customers want more, but they're not sure how to get more, and the airlines aren't sure how far they need to go because things are getting better."

Several large carriers, including Fort Worth-based American Airlines Inc., have already taken action by excluding corporate discounts on fares purchased with as few as seven days' advance notice.

"A few did it last year, but it's a standard for the airlines now," Mr. Restiano said.

Hoteliers also are less willing to offer new discounts.

So travel managers are turning trying to win other perks, such as free long-distance service or no-cost Internet connections, said Ruth Philpott, a manager for American Express Corporate Services' consulting division.

"Everything that drives up the cost of a hotel stay for travelers is negotiable at this point," Ms. Philpott said.

Travel managers also are booking at fewer hotels in an attempt to win better deals by promising more hotel guests from their companies.

Companies' hotel costs have continued to fall this year, although not as much as in the past. The price of the average booked room dropped 1 percent in the second quarter of 2003, but that compares with a 3 percent decline a year earlier.

One reason the costs keep dropping is that companies are booking more rooms at mid-priced hotels. That because many corporate travel departments' budgets are staying about the same, but they're being stretched to cover more trips.

One mid-price chain, Irving-based La Quinta Corp., is hoping to take advantage of that trend by increasing its corporate contracts this year. The company has doubled its sales force and reorganized its frequent guest program to appeal more to corporate travelers.

Contract proposals have been coming in "fast and furious," said Donna Cooper, La Quinta's vice president of field sales.

"Customers appear to be starting the process earlier this year, and they want answers faster," she said.

Corporate travelers' demands also are changing.

Last year, only a handful of clients wanted free high-speed Internet access. This year, "more companies are saying it's a mandatory requirement in order to participate," Ms. Cooper said.

As companies limit their contracts, hotels say they have to work harder to get their foot in the door.

"If a company's travelers aren't already going to your property, then they don't want to add it to their program," Ms. Cooper said.

For Dallas-based Wyndham International Inc., corporate contracts will account for 13 percent of room nights and 14 percent of revenue. Business travel overall accounts for about 24 percent of Wyndham's bookings.

"Two years ago, a customer could make a decision based on comfort and convenience," said Jamie Walters, Wyndham's senior vice president of sales. "Now, the bottom line takes a higher priority. Companies are being much stricter about where travelers have to stay."

-----To see more of The Dallas Morning News, or to subscribe to the newspaper, go to

(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News. AXP, AMR, WBR,

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| Catalogs& Pricing |
Viewpoint Forum | Ideas&Trends | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.