As companies worldwide grapple with the rise of direct booking, suppliers are accelerating this industry shift by bringing strong incentives to business travelers. In fact, to build customer loyalty and business, hotels are making big investments to lure travelers to book directly on their sites.
NB: This is a viewpoint from Tim MacDonald, executive vice president for travel at Concur.
Starwood Hotels and Resorts, for instance, was among the first to promise loyalty members exclusive discounted rates and free wifi when booking direct, and Marriott hotels just announced new incentives.
Starting mid-April, members of the Marriott Rewards loyalty program will get lower rates—and free wifi, and mobile check-in, and the ability to earn points or an additional 25 percent off when they book direct with any of the 4,200 participating hotels.
These supplier moves will only exacerbate the already significant issue of direct bookings by the business travel community. According to analyst firm IDC, 40-50 percent of hotel bookings and 28 percent of air bookings are considered invisible spend or leakage.
Phocuswright, a market researcher, says the percentage is even higher among millennials, with up to 64 percent stating that they sometimes book directly on supplier sites.
We’re seeing the same trend in Europe. Research conducted in conjunction with GBTA shows 39 percent of UK business travelers book direct, with 33 percent in France and 35 percent in Germany. In the same survey across the same three countries, a surprising 62-84 percent of travelers say their company allowed direct bookings in some situations.
It’s no wonder. With the global business travel industry estimated to be worth $1.3 trillion in 2015, we’ve seen an incredibly rapid proliferation of travel apps and new options to buy travel. In this landscape, hotels and airlines are going to get more creative and aggressive, by offering incentives and perks to business travelers.
But the risk is that this comes at a price, for the travel manager, the finance manager, and even the business traveler as well.
Booking direct makes business travelers difficult to locate, which means employers won’t be able to communicate with them in a timely fashion – or help them stay safe in times of crisis. According to GBTA, 66 percent of companies say they cannot locate their business travelers when they book direct. Moreover, 51 percent say they cannot communicate with their travelers. Only 20 percent of companies use technologies such as TripLink to assist with capturing duty of care data.
Booking direct makes policy compliance a lot harder to achieve, which can drive up costs. And booking direct can undermine a company’s ability to negotiate rates or to apply the corporate discounts they have already secured.
The challenges might seem insurmountable. After all, there are competing and conflicting interests in play. Suppliers like Marriott want to woo the individual traveler to engage directly with them, while companies want their travelers to go through their established programs.
Business travelers want to do right by their employers, but they also want to reap the benefits of being a loyal customer, which leads them to explore options available on supplier sites. Meanwhile, companies want their employees to stay satisfied and productive, but not at the cost of allowing them to use any app of their choosing.
But challenge is opportunity. Through technology and a robust ecosystem of partners, companies can still realize the benefits of their managed travel program when their employees do book direct, whether it is sanctioned or not. It’s not about compromise or sacrifice or forcing square pegs into round holes; it’s about imagination and innovation.
Companies need full visibility into all travel bookings, even when employees need to book direct, and the best tools for travel managers will meet that challenge.
NB: This is a viewpoint from Tim MacDonald, executive vice president for travel at Concur.
More context: Hotels and OTAs race to revamp their loyalty programs to boost bookings
NB2: Hotel booking image via Shutterstock.