Dell is now booking all rooms at dynamic prices, as the previously agreed rates have become obsolete in the wake of the pandemic.
Other large organizations should follow the move, too Hotel prices are expected to be much lower compared to 2019 – but how long remains to be seen.
Traditionally, corporate travel managers agree fixed or “static” rates with hotels, with negotiations largely based on the number of employees likely to stay there. Typically, the louder the volume, the lower the rate. These negotiations can take some time, with the annual application process taking up to six to nine months.
Dynamic rates are now the trend: For the travel manager, these are the best available rates of the hotel with an agreed percentage discount.
The dynamic switch
“We’ve been moving away from the traditional request-for-proposal process for a while,” said Shannon Blando, global category manager, Travel, at Dell. “Before Covid, our program was probably 80 percent dynamic.”
But now Dell is all-in with around 100 percent of its hotel prices, which are determined dynamically.
During the pandemic, Dell switched all of its static tariffs to this more modern method. “Prices were falling so quickly that our static prices no longer made sense to us,” she added Online event on Tuesday.
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However, with hotel occupancy on the rise in some recovering countries, how long will this dynamic approach last? Will hotel prices of 2022 be reset to the high prices of 2019?
It’s hard to tell, and for Blando, it’s the biggest challenge. Since she is in a purchasing role, Blando said she was judged on cost savings. “How can you predict trips next year or three years?” She said.
Dell will be closely monitoring pricing, and when travel volume gets back to a significant level, it acknowledged that it might make sense to revert to static pricing in some properties.
Dell uses re-shopping platform TripBam to help them obtain rates dynamically from a range of properties. Re-shopping tools allow travel managers to book a room or flight, but then automatically rebook it when the price drops.
Steve Reynolds, Founder and CEO of TripBam, said larger companies have migrated to a “dynamic, continuous sourcing environment.”
In the short term, however, he said some companies will revert to static rates. His advice to travel managers during this transition period is to simply speak to the hotels directly.
“You just have to go at the property level because they are the ones who want your business, even if it’s half of what you might be doing in 2019,” said Reynolds, who also spoke at the event. “Negotiate with people who are actually at the hotel and you will get much better results. Send bids directly to the property, not through a hotel account manager. “
Take off
“Continuous Sourcing” is the logical procurement response to dynamic price offers. Now TripBam is building to help corporate travel managers counter the growing trend of dynamic or continuous pricing that is spreading to aviation.
Like hotel prices, airfares are subject to fluctuations. However, these fluctuations will become even more extreme as airlines develop new pricing techniques, in part to offset losses that have increased over the past 18 months.
Continuous pricing is also achieved through the use of the so-called New sales function. Lufthansa presented its version in October last year and its top sales manager Skift said it would increase revenue for airlines and agencies alike.
Emirates is also on board. “Part of our strategy is more dynamic pricing, where tariffs change fairly quickly every day in response to market demands,” said Adnan Abdul Fattah Kazim, Chief Commercial Officer. told Skift in April.
TripBam is developing a platform for travel buyers to keep track of things and to buy these fluctuating flight prices if necessary.
“When we get up in the air, when we start breaking into the data, when we start seeing the issues around contract availability and measuring market share and some of the other weirdnesses in airspace, continuous sourcing is going to be looking at something else too “Said Reynolds.
Last month, Tim Nichols, global travel, meeting and event provider for accounting firm EY, left the position of the new Vice President of Air Solutions at TripBam. His job is to lead the introduction of his new solutions in the air sector.
“I don’t think we’ll have it from day one, but if we can pause the sourcing process to make it easier for buyers and to give buyers confidence that they are getting the deals promised, this is the point we’ll go “, he added.
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