ABTN speaks to Jo Stevenson, Accor’s UK and Ireland sales director, global and national sales, about recovery in the business travel sector.
How are business travel sales performing in the UK for Accor?
Last year, 2010, was a really strong year of recovery and we’ve seen that continue in 2011 in the UK, but also on a global basis. If I look at some of the distribution channels like GDS, which is the main channel that the travel management companies (TMCs) are using for booking business travel, we’ve seen a really strong increase in 2011.
The key cities where we’ve really seen some huge recovery are London, New York, and Paris especially – because Accor is so huge in France. Getting availability mid-week now for business travel is becoming more of a challenge. We’re trying to educate business travellers that it’s about booking early, which obviously they don’t like to do because they like to wait until the last minute.
The one area we’ve seen a decline is on public sector travel. I’m sure I’m not the only hotel group to say that. Being one of the largest business travel sectors in the UK, it’s really had a profound effect on some of our provincial hotels, particularly in the Novotel brand. I think it’s fair to say that all of our competitors will have seen that same decline in travel from public sector clients.
Is the private sector picking up the slack?
Absolutely. We’ve got a very big base of banking clients, which make up the biggest sector in the UK. There’s been a very strong recovery there, and also on pharmaceutical and automotive, particularly on meetings and events, where we’ve seen a very strong return this year. In 2010 I still felt on the meetings and events side that there was a trend not to want to be seen on a meetings board. Now I think companies are feeling a lot more confident in spending on meetings and events, compared to last year. We’ve been delighted with the sales we’ve seen coming through this year, particularly on the GDS and also on our web sales.
Is business travel back to pre-recession 2008 levels yet?
Certainly in key cities – London, Paris, New York. In terms of the domestic market for the UK, because of the impact of the cuts in the public sector, there are still some holes in that, as we’re seeing such significant drops.
How does the UK compare with elsewhere in Europe?
The French and German markets have been very strong this year for business travel. RevPAR growth in some hotels in Paris is following a similar trend to London hotels – very strong increases, and very constrained nights on the traditional Tuesdays and Wednesdays when business travellers are trying to get in.
Are you seeing any change in the dynamic between the TMC, the buyer and the hotelier?
I think ultimately we’ve always had a very strong partnership with TMCs and the corporates. In the past, in the middle of the crisis, it was really about controlling spend and trying to reduce travel. As we’ve seen the recovery come in and business travel growing that policy is still there, but the challenge now, particularly for the TMCs is about securing availability. Tuesday and Wednesday nights are traditionally the ones we fill very easily, so it’s about how we work with TMCs, particularly for the big corporations that support us throughout the year, to make sure we have availability. This is really where we work with the TMCs to protect availability on the prime Tuesday and Wednesday nights. The challenge for business travellers is getting in, particularly in key cities.
How are booking patterns looking – are people beginning to book further in advance?
I don’t think the trend on booking patterns is changing, unfortunately. We are trying to get business travellers to change their behaviour, but as we all know meetings come up at the last minute. People’s agendas are changing constantly. Things haven’t changed in terms of lead time, and we’re seeing the same in meetings and events. We’re still getting enquiries in at very short notice – sometimes as close as six weeks before a major event.
How about occupancy versus rate?
For occupancy, if you take key cities such as London, Paris and New York, the growth on occupancy is restricted, because we’re never going to fill Sunday nights with business travellers. We’re seeing flattened occupancy, maybe a 1% or 2% rise, but really it’s about average room rate and RevPAR (revenue per available room). In some cities we’re seeing RevPAR rise of up to 24%. The growth on rate has been significant. I think the challenge that will bring to corporates as they go into their buying period, which is coming up, will be about negotiating those contracts for 2012 in markets that have seen huge rate growth in the past year. It’s really all about securing availability in these cities now.
Do you think that means buyers are going to have to part with more cash? And will they also want more included in the rate?
I think so. Ultimately travel managers have a very challenging role. They have to make the savings for their organizations and each year every company is trying to tackle their travel spend and get the cost reduced. The challenges with hotels in the bigger cities is in getting the availability. All of the hotels will be under pressure to increase their contracted rates, so naturally we will have to work with those corporations to try and add more value, and ultimately to give them the availability that they need. I think that is absolutely key going forward.
What is Accor’s approach to small and medium enterprises (SMEs)?
SMEs are the backbone of the business travel market, and for us they represent a growing market. Our strategy, particularly to fill some of the holes from the cuts in public sector, is to find new companies that can fill our roles. We’ve developed three or four different offers for this particular market to try and help them manage their travel spend.
One programme is called Away on Business, which we developed specifically for the SME market. Rather than penalizing some of these small companies that perhaps don’t have the big volume spend that some of the HSBCs of this world have, we developed this programme. If an SME is looking for a global deal or a national deal, we offer a 10% discount off our best unrestricted rate. They just have to commit to 50 room nights a year. That is available in all of our brands, in 1800 hotels worldwide. It means we’re not penalising them because they don’t have some of the big volumes that other larger accounts have. They are given a dedicated contract number, so they can book on our website, or through our 24-hour global call centres. Then we can provide them with management information, which can be especially helpful if they don’t have a TMC managing their business travel.
We’ve also developed the Accor Business Account, which is our hotel payments solution card. It means that if I’m an SME and I have 10 travellers roaming around the UK doing ad hoc travel here, there and everywhere, I can have my Away on Business programme, which gives me 10% discount, but I can also be billed centrally at the end of each month with all of those travellers’ accommodation spend. I can pay for all of that by direct debit each month. It means I don’t have to give travellers individual credit cards, or deal with lots of hotel invoices at the end of each month. I can consolidate all of my travel expenditure into one invoice. It’s only available in UK hotels today, but we’re looking at expanding it into Europe.
We also have within our different brand specific offers for business travellers. For example, for Pulmman Hotels we have a business travel programme called Privilege Offer, where you get a complimentary room upgrade, internet access, breakfast and ironing service plus late checkout. Within each brand, including Novotel, Sofitel and mercure, we have different offers for business travellers.