Representatives from leading multi-national corporations and the hospitality industry came together to speak candidly at a roundtable discussion, hosted by the Association of Corporate Travel Executives (ACTE) and HSMAI Asia Pacific, to address hot issues affecting both parties.
Providing the background and basis for this discussion, Kenneth Phua, ACTE’s Regional Director, said, “At an ACTE Executive Forum back in December, the attention was on the stellar performance of hotels' ARRs in 2007, and the likelihood of room rates for the coming year exceeding a 20% increase. The steep rise in rates is said to be attributed to ‘demand and supply’ in the market. And in justifying the increase, hoteliers and industry performance data reports indicate that Singapore hotels have been long under-priced compared to other major Asian city hubs. Corporate buyers were not convinced that the rates were entirely justified and cited other issues like room availability as being a key concern.”
To assess the situation and facilitate mutual understanding between both parties on the issues, ACTE Asia Pacific & HSMAI Asia Pacific brought to the table corporate executives and hoteliers for an open and healthy dialogue with the intent of identifying ‘win-win’ solutions.
Magic Moments
• As hotels look to ‘Optimize the Asset’ and apply total revenue management, both sides recognize the need to account for the total business generated by a customer in order to appraise the full value of the relationship.
• Better quality and consolidated data is essential to deliver on point 1. The hotel representatives confirmed having access to revenue reports and data linked to consumption of hotel services, but agreed that more could be done to ensure completeness and consistency of data reporting. Since hotels possess the data, corporate and TMCs would find this information valuable and mutually beneficial.
• Some degree of transparency and open communication is needed to understand what each side wants from the relationship; access to key financial data to support essentials for an agreement has to be openly discussed in order for trust to be forged.
• Hoteliers have to understand that negotiation styles have altered with the involvement of procurement and sourcing professionals whose need for financial analysis may signal that hotel sales managers have to possess sound knowledge of the hotel business and, when required, a hotel Revenue Manager should be involved and sit in on client negotiations.
• Dynamic pricing is an option that needs further evaluation. Corporations are not closed to the idea, but felt that more engagement, trust and information on how dynamic pricing actually works and benefits both parties is needed to gain support.
• Corporate meetings and events account for a big portion of the budget and are still loosely managed. Corporations need to undertake measures to consolidate data and structure a policy that can be enforced in order to negotiate better arrangements and gain commitment from hotels.
Pointing out some of the reasons for the high increase in rates, Christine Toguchi – Managing Director of HSMAI/MacroVision Network Pte Ltd said, “With strong demand in the market, hotels are seizing the opportunity and realizing more profits by applying revenue optimization strategies and practices. Optimizing the ‘total asset’ by driving all revenue streams beyond just rooms is the key. With high property prices in Asia, asset managers are keen to know if operating a hotel vs. turning it into another commercial building will give them better returns. This adds more pressure on hotel managers to deliver the value to owners and operators”.
Representing their viewpoint and the corporate travel executives: Dinesh Chauhan - Regional Supply Manager – Travel and Asia Pacific Director, Philips Electronics Singapore Pte Ltd; Tan Pui Yee - Sourcing Analyst, MSD Technology Singapore Pte Ltd; and June Chang - Administration Manager, PricewaterhouseCoopers.
Providing their perspective and representing the hotel industry were: Andy Tan - Regional Director of Sales & Marketing for Singapore, Starwood Asia Pacific Hotels & Resorts Pte Ltd; Bernice Heng, Director of Sales International Sales for Singapore & Malaysia, Accor Hospitality; Genevieve Prieto - Director of Global Accounts, Shangri-La Hotels & Resorts; and Craig Fong – Board Members, HSMAI Asia Pacific.
The discussions were facilitated by Kenneth Phua - Regional Director, ACTE Asia Pacific and Christine Toguchi – Managing Director, HSMAI/MacroVision Network Pte Ltd Asia Pacific.
Participants agreed that the meeting was a good starting point and that more needs to be done on both sides to bridge the existing gap of knowledge and understanding of each others roles and responsibilities to stakeholders. From what this group calls its “Magic Moments” or key outcomes, ACTE and HSMAI will begin the journey to identify practical solutions to the issues cited.
