What a Difference a Year Makes...2010
10 May 2010
Commentary by Trevor Elswood, Group Managing Director, BSI
Complimenting strategically managed accommodation programmes, meetings and event management is now seeing greater sophistication in the procurement approach, giving rise to increased activity and interest in ‘specialist’ services according to BSI, the leading procurement specialist in corporate and public sector accommodation, meetings and events.
BSI has compared Q1 2010 data against Q1 2009 which has revealed some interesting customer trends within both the accommodation and meetings sectors.
Key findings within the Accommodation sector include:
• Room Rates with breakfast included rose from 53% to 60.5% of all nights booked - an unmistakable sign of hotel groups loading ‘value’ into pricing in softer demand periods.
• Average stay length is still showing like for like in bedroom accommodation requirements with on average 1.7 nights per UK booking and 2.8 nights overseas. There is a substantial increase in longer stay requirements for project work, training and relocations and so on, being met by BSI Apartments, BSI’s specialist serviced apartment solution.
• Nights booked are up by 9% in top booking locations including Bristol, Birmingham, London, Manchester, Edinburgh, New York, Hong Kong and Paris, indicating growing business optimism and the need to do business. Recent reports from Deloitte* of London hotel occupancy being up 5.4% to 76.2 in Q1 2010. As a result, attention should be focussed on potential rate inflation affects as demand buoys price pressure. Those without a procurement strategy should be formulating one.
From analysing results further, it is also apparent that compliance to BSI is a significant contributor to room night increases, as procurement and supplier work hand in hand to address rogue buying.
• BSI’s comprehensive bill back process is continuing to rise in popularity as a preferred method of payment, driven by a need to reduce internal company processing costs and an effective mechanism to drive compliance to the agency channel. Well over a third of all clients now adopt bill back as an effective solution to address compliance to their policy and their preferred booking channels. The solution is enabling customers to obtain consolidated booking and payment data, comprehensive management information and validation - all leading to a clear view of line item detail, greatly outclassing the corporate credit card.
• As predicted in 2009, average room rate is beginning to stabilise when compared to the same period last year showing a 4.5% reduction in top booking locations which follows significant ARR reductions in 2009. This reflects growing confidence in the supplier market place and wider economic optimism. The general forecast points to a hardening of London prices and a ‘softer’ position in the provinces.
• Customer preferred programme compliance continues to grow with preferred usage up a further 3% on the same period last year, indicative of strong customer compliance messaging, paired with robust system-led pre-authorisation processes. Preferred usage is now effectively ‘topping out’ at above 90%.
• Bookings data has shown a 40% drop in the number of 5-star accommodation bookings compared to Q1 last year. BSI clients are becoming more aware of quality standards and accepting of economy brand hotels amongst 2, 3 and 4 star properties with the growth in wider facilities in many budget properties such as on-site catering broadening customer appeal.
• Client fixed hotel programme rate negotiations reveal yet further reductions for 2010 after significant rate reduction negotiations for 2009 client programmes, both in the UK and overseas. It is also important to note that accompanying the rate reductions, we have seen a significant increase in the inclusion of value-adds such as free parking and F&B discounts, resulting in a positive impact on the ‘total cost of stay’ for many clients.
• Online adoption continues to rise on the back of the new BSIDirect™ version 3 release, launched in January 2010. New clients implementing BSIDirect™ in 2009/2010 saw an average 69% online adoption, reflecting the tools simplicity and intuitive design. Credit also goes to BSI’s exceptional E-Migration and account management teams who have been working diligently to deliver online coaching, web-casts and education awareness programmes.
The renewed focus for online transactions from the corporate market stems from bottom line transaction savings and effective management of spend for those utilising some of the highest procurement controls in the industry within BSIDirect™ V3.0.
Key findings within the Meetings & Events sector include:
• The continued reduction in average Day Delegate and 24-hour rates, observed in 2009, has started to level off ahead of predicted room rate growth in Q3 2010, as market confidence increases on the back of signs of demand growth.
• Meetings or Events held on a Monday or a Friday are still achieving an average of 8% lower day delegate rate when compared to those held mid-week.
Bookings activity has significantly increased as suppressed communications and people development based meetings have been put back in the diaries. This all points to the level of value placed on ‘face-to-face’ meetings and an increase in business optimism generally.
• Meetings attendance numbers have risen by 18% and meetings length has also increased slightly on the same period in 2009.
• Teleconference meetings have trebled, indicative of better technology and user awareness and comfort in the use of such mediums, along with coherent strategies to drive clients towards such cost avoidance.
• BSI Meetings & Events’ specialist event management business area has seen a significant upturn in the number of forward events being planned. Budgets remain suppressed with far more focus being placed upon memorable events being delivered by creative and innovative thinking rather than irrational and unjustifiable budgets.
• Interestingly, there hasn’t been much change in booking lead-times. The percentage of bookings being made with a [1-10, 11-20 and 21-30 day etc] lead-time were relatively static. Although actual booking numbers were higher, the lead-time data signifies that meetings planners are still erring on the side of caution before committing to contracts and final numbers.
Evaluation of BSI booking data and customer profiles for Q1 2010 point to signs of increased demand and activity across all customer markets when compared to Q1 2009. Properties in many locations are highlighting stronger meetings space occupancy levels for the early part of 2010 but Q2 data comparisons will certainly be distorted by recent airspace closures.
BSI’s heavy investment in client technological innovation has continued and is resulting in significant client savings and cost avoidance within the meetings and events market. For example, through optimising the use of internal meetings rooms, alongside effective system led pre-authorisation policy processes to control external meetings spend, Tesco have made a £3m meetings saving.
Prices remain competitive and activity is rising but despite some signs of recovery, the effects of the recession are still noticeable and there is, no doubt, still a long way to go before the industry can look to a full recovery.
* Source: Hotelbriefing.com