What a Difference a Year Makes
27 February 2009
Group Managing Director
BSI’s close watch on the total accommodation and meetings market brings into play the stark reality of the year ahead with a direct comparison of January 2009 booking trends against January 2008.
With in excess of a £155M spend across the sector and heavy focus on the UK and Europe, Trevor Elswood, Group Managing Director of BSI the leading procurement specialist in corporate accommodation and meetings management highlights the change in supply and demand, and the profile of that demand in both the accommodation sector, and meeting and events market.
On the Accommodation side of our business we have seen some very interesting dynamics –
Compliance to preferred hotel booking programmes and company policy has increased 5.8% reflecting harder policy measures and communication by customers looking to reduce their costs through leveraging their spend with preferred suppliers. Supporting this growth is a whole raft of technologies and electronic authorisation processes which BSI has delivered in its core reservation technology, and which are seamlessly replicated within BSIDirect™, our online self-booking tool.
Average rates have fallen significantly, primarily through best rate buying and access to the wide range of special rates that are being accessed outside the GDS. This has led to 19% of customer rates being undercut by BSI’s rate searches, against 2008 levels. This reflects a softening market and more importantly BSI’s ability to source and identify the lower rate channels.
This is supported by BSI’s no cost Supplier Extranet site (where rates and availability can be posted) and the multiple channels that BSI sources its rates through, such as hotel, third party web sites & direct connections with properties. And that value does not stop at room rate level. The figures show a dramatic increase of 8% in the number of rates booked now including full breakfast, again reflecting additional added-value services and reduction in the total cost of stay calculation.
In terms of payment solutions, interestingly, as corporations look to drive higher levels of compliance to their policy and their preferred booking channels, BSI has noted a 4% increase in the number of nights booked using BSI’s comprehensive bill back payment process. This not only enhances compliance aspirations but also delivers back-end process efficiencies and cost savings at customer accounts payable and expense management level.
Customer stay length has decreased by over 4% sitting at around 1.86 nights. However, BSI has seen a significant upsurge in demand for apartments and long stay accommodation through its specialist apartment brand Abode, with demand year on year increasing by over 75%. This has made a significant contribution to BSI’s Total Accommodation Management strategy and provides corporates with visibility of complete spend in the accommodation sector.
An interesting start to 2009 highlights that year on year the customer is making full gains across a wide range of indices from compliance; rate reduction; added value and process cost.
Meetings and Events
Trevor Elswood BSI’s Group Managing Director, reflects upon the year on year trends within the dynamic Meetings and Events business arena. BSI has seen rapid growth in this sector since the acquisition and successful integration of specialist event logistics and production business, Olive 360°.
2008/2009 will see BSI’s annualised meetings and events turnover volumes rise to position it as one of the largest full service meetings and events agency providers in the UK market. Significant business wins already in 2009 – including Tesco’s training and venue find business - supports BSI strategy of blending technology, talent and innovative fee structure transparency.
Trevor Elswood comments:
As a business we intend to set the standard by meeting the needs of UK procurement professionals who seek to take control of meetings and events expenditure. BSI’s turnkey approach delivers the controls and savings performance needed by corporations, whilst optimising compliance and adoption through innovative online booking technology for small internal and external meetings. We also take consultative approach with meeting organisers for the more complex meetings and events.
The need for control of this sector has never been so great with corporations looking to reduce costs and drive value in a rapidly changing market place, which BSI’s one year on analysis clearly validates (Jan 08 compared to Jan 09):
The average number of delegates attending an external meeting is up 23%. An odd trend at first glance in an environment where corporations are looking for cost reduction – but as BSI focuses upon implementation of technology and authorisation processes, to optimise internal meeting space, we are seeing a robust move for clients, in both policy and processes in the use of internal meetings space, over and above external venues.
The average 24-hour residential delegate rate has reduced by 14.8% across the UK and the average daily delegate rate has reduced by 8.9% - both signifying a softening of demand and the ability to leverage buying demand. In fact one of the greatest shifts in pricing is seen through BSI’s specialist ‘training services’ area where BSI’s proactive work with clients to establish their longer stay requirements and repeat business needs has delivered a year on year downward rate movement of 27%.
The length of the meeting has remained pretty much consistent year on year but lead times have moved dramatically with over 72% now being booked within 40 days of the event, compared to 61% a year ago. However the levels of ‘speculative’ meeting planning requests has fallen, resulting in a far greater conversion ratio due to pre-authorised and shorter lead time bookings.
Again, opportunity beckons to the meeting organiser to drive better value. One key trend is the continual pricing gap between Monday and Friday meetings compared to Tuesday, Wednesday and Thursday meetings, with data highlighting a 31% price reduction on the softer Monday and Friday meetings. Clearly the ability to reduce cost through diary planning exists and is fundamental in BSI’s customer behavioural change programme which looks to address such opportunities through effective client engagement and communication.
Third party audio-visual programmes provide better rates in 72% of instances, than the venues providing in house Audio Visual themselves (where they are not offered as a complimentary service).
Clearly, effective management of the Meetings and Events business expenditure for corporations is critical in such an unsettled market place.
BSI’s strategy is very clear for 2009 – it will focus on delivering cost avoidance (internal meetings space, video conference solutions) and cost reduction opportunities to support procurement executives looking for robust and sustainable solutions to compliance and control with a single full service provider.