Hotel RFP and rate cap policies

It’s always an extremely busy time for a Travel Management Company (TMC) when it comes to hotel Request For Proposal (RFP) and this year has been no different at Clarity.

It is important to ensure clients and partner hotel chains are all on the same page and understand each other’s business objectives. This is why Clarity holds its annual RFP day where everyone comes together to discuss industry trends and what challenges are to be expected from the market in the coming 12 months.

The product team and account managers outline what they will need and crunch the numbers to set their rate cap policies before deals are struck with hotels. That rate cap will need to align with your business objectives for the next 12 months whether that be pricing, sustainability etc.

The Effects of The Pandemic

The pandemic saw a real slowdown in RFPs but things are taking off again as firms continue to return to normal and business travel growth is on the up. Hotels have also been battling with increased costs such as energy prices and higher wages meaning the keen pricing often available for loyal corporate clients has had to be reviewed.

Suzanne Barnes, Clarity’s Head of Land Product, said:

“Since covid, the landscape has changed. In the past hotels would be very keen to please and give clients excellent rates for their loyalty. Over the past few years that’s changed, hotels no longer need the corporate business in the same way and with costs rising they have been tough with negotiations. I would ask clients to really look at their buying patterns and if there is anything they can change”

• Can they reduce the number of hotels on programme?
• Can they book more on Monday and Thursday nights and avoid Wednesdays?
• Can they mandate programmes?

“These kinds of actions give hotels the confidence they are going to get the business from them and that’s the best way to secure the best rate. The pandemic has also seen a shift in focus perhaps, with sustainability and employee wellbeing now rating far higher in importance in decision-making."

That could be because younger people make up a larger proportion of the workforce. Those employees are seen as the ones who will be proactive in trying to change the course of climate change. Plus business managers want to maintain a happy workforce, therefore making them more productive, which is why employee welfare is now a priority.

Looking to the future

Looking to the future Suzanne added: “We try to encourage clients to move away from their own RFPs nowadays, making use of the Clarity Rooms Flex rates which utilises Clarity’s overall buying power meaning clients can benefit from the best possible rates in the market.

For clients that do have their own RFPs the product team will look at business the client has produced so far this year into key locations, they will then discuss with the relevant account manager anything else that hotels need to take in to consideration – i.e. is the client willing to mandate their hotel programme and will they commit to booking a certain number of room nights with a hotel?

Once we have gathered the information we will contact hotels via our RFP tool (Lanyon). The hotels supply us with rates and using our expert knowledge we will then negotiate on behalf of the client to ensure we have rates in place that are realistic and in line with the market.”

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