How is the sector fairing up in 2009?
16 September 2009
Following on from BSI’s direct comparison of January 2009 booking trends against January 2008, the leading procurement specialist in corporate and public sector accommodation, meetings and event management highlights more changes in the constantly evolving market place.
Commentary by Trevor Elswood - Group Managing Director, BSI
This comparison of the combined Q1 & Q2 2009 booking trends against Q1 & Q2 2008 further demonstrates the changes in supply and demand and the growing sophistication of the buyer.
At BSI, we have certainly seen this following on from the recent account acquisitions of E.on and Cable & Wireless. Outlined below are some more of the trends that we have noticed throughout the first half of 2009.
• First, a closer look at the accommodation market shows us that rates with breakfast included rose from 21.2% to 53% of all nights booked. This is a clear signal that hotels are continuing to load ‘value’ into the pricing in softer demand periods.
• Bill back is continuing to grow and all new BSI customer wins have been bought on to include this payment solution. Early in 2009, BSI reported a 4% increase in the number of nights booked using BSI’s comprehensive bill back payment process. More recently, BSI has noted a further growth of 2% in the use of its bill back solution, as organisations look to drive higher levels of compliance to their policy and their preferred booking channels as well as reduce back-end customer processing costs.
This may seem somewhat surprising given the industry noise surrounding the use of credit cards. However, for BSI the evidence is clearly in favour of a payment solution which provides customers with consolidated booking and payment data and gives them comprehensive management information and validation that far outclasses credit cards for line item detail.
• Average room rate is continuing to tumble year on year across all locations with London, Birmingham, Leeds, Bristol, Manchester, Edinburgh and Glasgow recording some of the highest reductions of up to 22%.
• Customer preferred programme compliance has reached record heights. This is reflective of stronger customer messaging and increased BSI support of compliance activity and robust authorisation processes.
• Stay length has stabilised and is showing like for like, year on year levels.
• The next generation (Version 3) of BSI’s online self-booking tool, BSIDirect™, is positioned for launch this winter. This will build upon the great steps achieved to date for online migration now sitting on average at 38% of total BSI business transactions. Those clients that have migrated fully to online are now reaching adoption levels of between 65% to 75% and therefore delivering bottom line transaction savings and effective management of spend.
The meetings and events element of BSI’s business model is continuing to grow on the back of the continued customer demand and BSI’s alignment to the procurement ‘convergence’ agenda. A one-stop-shop for venue find and event management, BSI’s open book and innovative technology approach to business solutions continues to meet the needs of the corporate market place.
• Day delegate rates have seen a 16% reduction and 24h hour rates a 26% fall, suggesting a continued soft meetings market and the focus of BSI’s strengthened meetings & events team when it comes to negotiation.
• Meetings attendance numbers have risen by 18% but meeting length has reduced by 14%, signifying the importance that customers still place on the value of ‘face-to-face’.
Evaluation of this data and customer profile points to signs of increased activity across all customer markets, albeit modest, suggesting an inkling of business confidence filtering back into the need for people to meet and travel. Hotels in many locations point to some stronger occupancy levels, driven in London by the continued short stay European visitor demand, which in turn will start to build the room rate growth predicted in Q2 2010.
Meetings demand remains pretty flat and prices are very competitive. Commitment to contract out requirements remains a short lead time process, suggesting that this segment has still some way to go. There are, however new practises for internal meetings optimisation and tele and video conferencing that may never see the return of previous market levels as corporates find alternative ways to conduct meetings.
At BSI we are investing heavily to ensure that we meet the needs of this new market dynamic with technology innovation that incorporates internal meeting room management systems and other cost avoidance measures through both online technology and our reservations centres.