Corporate customers still driven by location and price

Times may have changed and hotel branding may have become more sophisticated, while customers may have evolved. But when it comes to corporate clients choosing their hotel, location, location, location remains as true today as it did when the hospitality industry was first invented.

During a panel discussion on "Voice of the Customer" at Asia Connect, organised by the Hospitality Sales and Marketing Associates International (HSMAI) in Singapore recently, the four corporate customers were fairly unanimous in singling out location as the number one criteria in their selection of hotels.

Indeed, they said it was even more important now because a good location means savings on transportation and time for their executives.

After location, they cited price and loyalty programmes – points earned – as the second and third-most important criteria.

Only one mentioned "relationship" – Ms Nellie Yeoh, Manager, Events & Programmes, The American Chamber of Commerce, Singapore, and she was the same customer who looked for "service".

Mr Greg James, General Manager of HRG Singapore, a leading travel management company, said relationship was a two-way street and hoteliers should keep that in mind when times are good.

The good news however for hoteliers is that the four panelists said they had not seen a big slowdown in their companies' corporate travel spend yet, and do not foresee any dramatic downturn for the rest of the year.

"Inter-regional travel is still active. Asia Pacific is still a growing market," said Ms Tan Pui Yee, Sourcing Analyst of MSD Technology.

More companies maximise travel spend

What companies are doing is to get smarter about their travel spend.

"Travel buyers and procurement are devising strategies to keep costs down and get smarter about travel," said Ms Meredith Owen, Travel Manager-APJ, Merck Global Travel Services. "So rather than cut travel, they are getting smarter about it."

Mr James said the most common questions asked by customers were, how can you help us save money or how can we get smarter about travel spending?

"We are starting to see companies pushing policy and compliance, and they are watching the dollars. If you are a preferred hotel, you can weather the storm.

"Long term, this is also good for business."

Ms Owen said policy compliance was critical to saving costs. "If I can achieve full compliance, I can save at least 20% on travel costs."

Ms Yeoh, whose company organises events almost every week in Singapore, said she was talking to hoteliers about reductions in their rates. "Rates have become more expensive this year and we are looking to re-negotiate for the rest of the year."

Their comments came after a series of sessions in which hoteliers had discussed branding issues, and how hotel brands could differentiate themselves, whether through service, design or other tools.

When it came to the crunch though and what customers wanted, branding hardly figured in the discussion.

Other than Ms Owen who said Starwood had done the best job in differentiating itself, the other panellists said that no one hotel brand jumped out instantly as having differentiated themselves in their minds.

The panel discussion confirmed the global corporate travel sentiment prevailing in today's times – cut costs, get smarter and enforce compliance and policies.

Demand for travel remains as companies cut travel costs

The "Insight On Corporate Travel" study conducted by the global travel management group, BCD Travel in April this year, showed that companies were focused on reducing their total cost of travel, with 97% of respondents citing that as a key programme objective.

"They are reducing processing costs through increased usage of online booking tools, enhancing policy communication to travelers and enforcing the use of suppliers and the preferred agency," said Mr John Snyder, President and Global COO, BCD Travel.

The study showed that despite macroeconomic concerns, over 50% of buyers predicted demand for travel would increase by the end of 2009 in North America, Europe and particularly Asia.

Up to 27% of buyers estimated that demand in Asia would grow by more than 10% in 2008.

"China and India are driving demand in Asia," said Mr Roger Pfund, BCD Travel's General Manager and Vice President for the Asia Pacific region, in the study. "Demand in Singapore is also strong as this is where many regional functions sit.

"Other emerging markets like Vietnam, Korea and Taiwan are also adding to demand as companies look to these markets for business expansion opportunities. We expect this growth to continue, as most travel is intra-regional and is only marginally affected by the US economic slowdown."