In January, HRS, the Cologne-based digital hotel technology company, opened its first office in the Americas, in New York City, which is home to its first 25 US employees.
Until now, HRS has been under-weighted when it comes to its Americas inventory, with about 50,000 properties, via mostly chain arrangements. Compare that to its global figures, where about 180,000 of the 300,000 hotels in its database are independents.
Striving to right that imbalance, the company's new staff has begun to add “dozens of prominent independents” a month, with an emphasis on properties near downtown business districts, such as Hotel Mosser in San Francisco and Room Mate Grace Hotel in New York City.
That's just one push by HRS on multiple fronts into the US and Latin America.
On March 29, HRS hotel content went live within the Travelport commerce marketplace. It had previously integrated with Sabre and Amadeus.
Earlier this year, HRS began integrating its content into the TripLink platform for travel managers run by Concur, the US travel and expense giant.
The German giant has also signed deals with several business travel programs over the past year. While HRS works with thousands of travel management companies (TMCs) and more than 3,000 corporations worldwide, it has been under-represented in North America.
To appeal to these programs, it is about six months away from launching in the US its small meetings program, which will help line up the transient hotel spend on small meetings, to provide volume-buying power and faster reservations for its corporate clients.
Globally speaking worldwide, HRS has been on a growth spree. Last year, it boosted its employee numbers worldwide by 15% to 1,600.
To learn more about its push into the Americas in particular, Tnooz spoke with Suzanne Neufang, who has been HRS vp, Americas since March 2015.
Tnooz: For readers not following HRS closely, what’s different about HRS’s approach?
Suzanne Neufang: Please bear with me as I go back to the genesis for why HRS started doing things a bit differently… Travel search has been becoming exponentially more expensive for hotels…. In the past five to eight years, we’ve focused on providing additional hotel content to managed corporate travel as a strategic shift….
We’re now the largest chain provider in the GDSes, making us a very important player to corporate-focused agencies….
In North America, online booking tools are vital to the culture of corporate travel. We need to be a better content source in that channel. That’s what we’re working on now…
Tnooz: What’s important about your deal with Concur Travel, announced this spring?
Neufang: Our newest partnership is a realigning of our APIs built back around 2009. We're basically reversing it so that we can push the best and most important things, like payments, technical information, to their APIs….
Tnooz: How has HRS's experience as a B2C player in the German-language market informed its B2B play globally?
Neufang: Due to our B2C business, we’re constantly shopping to make sure that we are price competitive, and we're looking at about 7 million rates on a monthly basis, globally. That keeps us competitive for our B2B market, too.
We understand what a negotiated rate can do for saving in a managed corporate travel program.
We've seen, over the last year or so that we can deliver, on average, about a 9% savings, compared with if you did nothing, in the managed space. We have negotiated rates with 50,000 hotels globally, with more to come.
Our B2C work also keeps us very close to that end-traveler experience on the B2B side, to learn what works with conversion…. We apply those lessons to how a corporate traveler may get in and out of a booking processes faster, even while staying in compliance with policy and presenting negotiated amenities.
One thing we brought from B2C to B2B is map-based search, to boost conversion. The corporate traveler or TMC typically starts with a map-based search to hunt for hotels that are in policy…. We've found that that interface switch boosted conversion.
Tnooz: When corporations work directly with HRS, travelers give you the feedback directly. Could you elaborate on that?
Neufang: Sure. We do traveler satisfaction checks all the time so we have a lot of great feedback we make available to our clients…
Another thing: When we're doing a sourcing engagement, our staff of 36 full-timers globally provides a way for companies to benchmark what their opportunities for hotel savings are in the next year — not just the GDS and chain properties that they've known about for years but the 180,000 other properties that we have in our system that they wouldn’t have workflow-convenient access to otherwise. …
When we're doing a sourcing engagement we use our own travelers satisfaction rating reviews but we also partner with TrustYou which is another rating aggregator in the world, not just for travel but for other things we use them for their hotel ratings as well, so we have an even broader view into the ratings that these hotels get.
We also work with hotels that see ratings drop to try to help them turn things around.
Tnooz: How many people do you have devoted to sourcing?
Neufang: We have about 380 staff who are hotel facing and 36 of them are specific sourcing RFP management experts. About 10% of them only work with corporations, on their behalf, to source their program.
The other 90% are working with hotels everyday all year long to make sure that they show up well in the system.
When we get a new corporate customer, they say, "hey, I've worked with this hotel, in this rural area in, say, a manufacturing area of China. We go and get that hotel, via one of these 360 staffers.
You would be hard pressed to find any consulting group in the world who has that commitment to hotel sourcing.
Tnooz: What is the goal of your expansion in the Americas?
Neufang: We had already, for about three-and-half years a staff in Latin America as part of an acquisition, based out of San Paulo. We have about 25 staff there as well.
Our commitment is to sourcing hotels and raising our 93% RFP response rate, especially in that tough to reach independent hotel market in the Americas as well.
Then ultimately, maybe by end of this year, adding on a payment solution to our set of tools
We also plan to work on changing TMC perceptions. There is perception by US corporate managers that the world is made up only of chain hotels….
There is a big mission for us in this market but also outside the US for us to make clients aware of the kinds of great independent properties that they could stay at. Negotiating power might be diminishing with the kinds of mergers and acquisitions that are happening within that big, chain hotel space.
If you count by property number, about 40% of the properties in North America are independents.
Tnooz: What do think about programs that reward corporate travelers for staying within policy? As The Company Dime essentially asked recently, is it a gimmick or an effective tool?
Neufang: I've always been a proponent of policy and compliance because it's part of how they get to saving but it also is how they get to duty of care information about where their travelers are.
It depends on a company’s culture if it ought to go into the gamification piece of rewarding travelers…. It’s not for everyone….
Plus, the variance between in-compliance could be below the rate cap that you're looking for, it could be staying only at the preferred properties. Which sometimes doesn't work because your meeting might be across town and you just can't physically get across a city, like Chicago in morning traffic. …
There are lots of ways to measure compliance besides price.
What I see companies doing more and more is thinking about what their true goals are. If it's to create a platform in which they can save money and track their travelers, so they can find them in an emergency.
Then ultimately those become the table stakes for the way that they manage their travel program.
Then having content in places around the world where they typically don't have content and where travelers are more likely to go outside of the system become the way to bring them back into the system to be able to track savings and availability and where they're actually staying to make it a double win for them.
It is kind of odd to me to think that there are travel programs out there that hire people to do this and who actually don't have any tools in their tool kit to make their travel program be used by their travelers.
It's always been a bit of a conundrum to me.
It would be like, in the US at least, where you have a managed health care program that these large corporations are out negotiating with insurance companies and then you would have employees not use that program when they sign up for benefits. It would be a bit off, right?
To be fair, with travel, it’s a bit murkier. You have so many choices when you're staying at hotels, giving choice within that process seems to be a key way to make that employee universe feel like they're being listened to, that they're part of the overall program, and that where they're meeting is held can actually be a key competent of allowing them to stay in the system.
Tnooz: Why should companies or TMCs need to bother with HRS?
Neufang: It's a generalization but it is true of almost every company, that somewhere between 40 and 60 percent of a company’s hotel travel spend is leaked outside of their managed corporate travel program.
That is a stat that really hasn't changed much over the 10, maybe even 20, years, although maybe getting to the 40% range was something to celebrate 10 years ago.
Tnooz: Is this HRS's data on leakage?
Neufang: I think it’s Phocuswright data. But anecdotally, it's true with every TMC I've spoken to in the last 5 years. It's also true, certainly of what HRS's customers tell us before they join us.
Average is 50%, but I'd say it's more commonly between 40 and 60 percent, so for any executive that just shouldn't be good enough.
That would be like saying, 60% of your travelers are going to 5 or 6 different websites to look at hotels before they go on a business trip and besides not being able to track the savings that you've generated by what they booked and what was available that day.
They're also not able to track the traveler when they actually show up and land wherever they are.
Most companies have between 90 and 95 percent compliance with air and we just think at HRS, an unforgivable stat to have 40 to 60 percent hotel weakness within their program and be complacent with that.
Duty-of-care is also a must….
Then the question comes, what can we do about compliance?
One is to, make more content available, because a lot of times if you've got a globally, traveling workforce and their looking in your tools, or working with your TMCs and there's just nothing that they give you that is a good option for your stay, you do start looking on your own, or that TMC starts looking on their own to try and help you find something.
HRS brings more choices, so you can stay within program.
The second key step is to have a great, a well run, negotiated rate program. Wherever a company has, let's say 250 or more room nights a year, those cities should have some kind of negotiated program….
A company like HRS can do a great consulting engagement with the corporation for the city where you have this kind of travel plan to get you some kind of savings.
The 3rd piece is to look at all of those adjacent solutions that would help your travelers see that you were taking good care of them.
I would add to that a payment solution that ultimately lets the corporation do value added tax collection very easily and seamlessly but also makes payment and reimbursement as easy as possible for corporate travelers.
Currency exchange and all of the other things combined, not every company gives a corporate credit card to their travelers, not every company has a corporate card that is accepted at smaller hotels around the world. Having a payment solution that could be as easy as the UACP program in air would be something that we could offer as well.
Then finally, the meetings piece is huge. Small meetings have often upwards of 60 percent leakage today.
Wouldn't it be great if corporations could add that hotel spend into their overall hotel spend program and be able to leverage their buying power to an ever greater extent?
Tnooz: What do you make of activity in the event and meetings space space?
Neufang: Cvent’s and Lanyon’s expertise has really been in the large events, 300 people or even above 100 people, though they tend to be US-centric….
The small meeting space is so much more fraught, with people who aren't experts at meetings or travel arranging being in charge of making arrangements.
There is lots of room for some great, key tech players to come to fruition there. HRS invested in a company a little over a year ago.
There is a lot of opportunity for us to blend again the small meeting space with the ultimate transient and bring all of that data together in an actionable way.
Tnooz: The two US-based, major online travel conglomerates have been tip-toeing into B2B services and business travel. Any thoughts?
Neufang: I certainly applaud smart competitors…. And all OTA systems, at some level, have always served the unmanaged and lightly managed business traveler space….
I'd say winning the hearts and minds and winning loyalty from that group of unmanaged, lightly managed travelers requires a long battle because they are competitive shoppers.
I would say that the space that HRS has chosen to work in is the managed space, which is more highly compliant. I think we are one of the only hotel purveyors that does that, and we understand the needs of procurement leaders exceptionally well.
Tnooz: Is there anything from the ACTE/HRS corporate manager survey, something that was really eye-catching?
Neufang: One of the things we found, of course, was that the large, managed programs still tend to do an awful lot of their work manually, themselves.
Many need to hire a procurement leader, someone who could be a manager of their global view and also have more time to be more strategic.
Too many are busy filling out spreadsheets for 6 months of the year. They need to be able to drive strategic decision back to the corporation.
You have to find way for the buyer community to find time to be more strategic in what they're doing, … certainly on an an annual basis.
Tnooz: Why are your GDS partnerships, like the recently signed one with Travelport, important?
Neufang: We know that process and efficiency and optimized operations are really important to TMCs and agencies, because time is money.
You want to get your agents off the phone so they can actually do the kind of work that's really revenue generating.
We did some time/motion studies here. Compared to a counselor having to go offline, Google things, call up the hotel, and figure things out on their own, when we're in the system of a GDS we save you, on average for every hotel booking that becomes enabled through that, at least $1.75 per hotel.
If your counselors are booking 50 hotels a day, that starts to add up.... We're the largest chain code in the GDSs, with 5 million rooms, so we matter.
This is where we can bring you, through a GDS like Travelport, some of those great process efficiencies for these kinds of hotels in areas of the world that your counselors might not know actually where to go.
Tnooz: To close, what's your big picture take on the industry today?
Neufang: Corporate travel in the US is focused on retention, given a tighter job market and rising hotel rates. The need to balance savings with that traveler satisfaction is becoming more important. The industry needs to adapt.
Earlier:With new investment, HRS amplifies its corporate travel push, to outflank its rivals