Staying power

With gross sales figures holding steady and no decrease in transactions in 2009 compared to 2008, HBAs appear to be weathering the storm, says Mark Frary

By most standards, 2009 was a bad year to be a hotelier. Average room rates were down substantially on 2008 - in the teens of per cent - brought about by a slackening of demand. Against this backdrop, it was always going to be an interesting year for hotel booking agencies (HBAs).

HBAs have become a force to be reckoned with over the past few years in the corporate market. Many travel buyers have realised the advantages of going to a hotel specialist as opposed to going to a one-stop-shop travel management company (TMC) for everything from air and rail to meetings and hotels.

Dedicated agencies

Dedicated HBAs do hotels well, as you would expect. They often allow their clients to book a wider range of properties in a broader range of locations, usually through a combination of global distribution systems, connections through switches such as Pegasus, and direct connects with hotel companies themselves.

As well as the number and spread of hotels, dedicated HBAs usually offer specialised online hotel booking tools that feature rich content - such as detailed room descriptions, images, mapping and so on.

Companies that decided to go down the HBA route in 2009 include the commercial television network ITV, which appointed Hotelscene; the supermarket Iceland, which awarded its hotels contract to Expotel; electrical retailer Comet, which appointed Inntel to handle an annual £1m venue-finding contract; and electricity company E.on and telecoms firm Cable & Wireless, both of which appointed BSI to handle hotel bookings.

The SME market

The HBA doesn't work for everyone. It is particularly suited to those corporates who have a large volume of hotel spend and a diverse geographical requirement.

Increasingly, smaller TMCs are effectively outsourcing the management of hotels to specialist HBAs. In August, for example, Chelsea Travel Management announced it had awarded a two-year contract to Hotelzon to manage its online hotel bookings.

Hotelzone is also working with Co-operative Travel Management on the roll-out of Payment Service, its new billback solution.

TMCs vs HBAs

This is the second year that we have separated the HBAs from the TMCs in our annual rankings. Once again, we appreciate the effort that HBAs have gone to in submitting detailed information about their operations. We have expanded our list to encompass the top 10 HBAs in the UK.

So how did HBAs do in 2009? On the face of it, the answer is generally "not as bad as might be expected". Of the HBA sales figures in our list, Expotel's are down on 2008 but only by 10 per cent. The remaining HBAs all say they have increased their sales, although the figures are provided by the HBAs themselves.

At the same time, the larger TMCs have become more keen on developing their hotel businesses, largely because the commissions from hotels are becoming increasingly important in a world where airline commissions have vanished or are on the way out.

The move of the TMCs into the hotel sector, through a greater focus on dedicated hotel departments and a louder sales message, might have been expected to take a bigger toll on the HBAs in our list. However, it seems clear that the HBAs have grown the market. This success also certainly comes from a move from unmanaged hotel bookings into a more sophisticated HBA environment.

Corporate clients, it seems, are increasingly attracted by the services that an HBA can offer compared with making a booking directly themselves. Things such as management information, and traveller tracking and security - particularly in the light of events such as the Mumbai hotel bombings - are seen as increasingly important.

Summary

Expotel stills leads the ranking despite a 10 per cent drop in total gross sales. In May last year, the company said that some of its international corporate clients were trading 20 per cent down; however, it had a strong pipeline of new business wins and also had the additional business gained through the acquisition of First Option from Travelocity at the end of 2008.

While gross sales figures - at least for those in this ranking - have not been significantly hit, there was no decrease in the number of transactions in 2009 compared with 2008 and, in many cases, the number has increased, suggesting that HBAs are being asked to do more for the money they earn.

This year we asked HBAs to provide us with a figure showing what proportion of their transactions are handled online. The average figure - 55 per cent - hides some big differences.

Ranking leader Expotel handles only 5.2 per cent. All of the other HBAs, with the exception of BookOTel, handled significant proportions of their business through the online channel.

Among those companies doing significant business online, the focus this year has been on making the booking process quicker and slicker. Hotelscene's MyStay tool, launch during the year, reduced the booking process to three clicks and was claimed to reduce booking time by 30 per cent compared to previously.

The figures highlighting the breakdown of transactions show that HBAs are still handling hotel bookings far more than any other travel mode, as you would expect.

Some HBAs have expressed an interest in broadening their appeal to become more like one-stop-shop TMCs. However, this has not really materialised, except for a small minority of corporate clients who perhaps have a large number of hotel bookings with only a limited need for air reservations and who find the services of a dedicated HBA that is also able to book flights adequate.

With hotel spend down, many HBAs have been looking at their meetings, incentives, conference and events business to drive growth.

In November, Expotel acquired LateMeetings.com. Ian Burnley, Expotel's CEO, says the acquisition is designed to grab the growing proportion of MICE business that is being handled online.

It is not just external meetings either. In February, BSI announced that it had helped supermarket Tesco save £3 million through better management of its internal meetings. The company says it has handled the management of around 50,000 meetings through its self-booking tool.

The Hotel Booking Agents Association (HBAA), representing the industry, says that the move online of meetings management is going to be a key trend for the next few years as more and more venues upload their inventory. HBAs are clearly going to be in a good position to manage that.

 

Rank 2009 2008
1 Expotel Expotel
2 BSI BSI
3 Hotelscene Hotelscene
4 Inntel HRS
5 NYS Corporate NYS Corporate
6 HRS BookOTel
7 The Corporate Team Hotel.info
8 BookOTel Inntel
9 Hotel.info -
10 Hotelworld -

 

 

The typical HBA

  • Average gross sales: £59.6m
  • Average number of transactions 471,633
  • Average transaction value £180.51
  • Average onlinetransactions 55.1%

 

Breakdown of transactions

  • Air 3.1%
  • Hotel 74.5%
  • Road 0.4%
  • Rail 3.2%
  • MICE 18.2%
  • Other 0.7%

 

(Note: figures throughout do not always add up to 100% because of rounding-up)

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