REPORT FROM THE U.S.—The world of corporate travel is under assault from rogues. And many hoteliers are preparing to capitalize.
The so-called “rogue” traveler is one who books and manages travel independent of corporate travel policies. A synonymous term is “unmanaged.”
But how they are labeled is far less important than how they are impacting the travel landscape. For travel managers, they create headaches. Businesspeople that book outside of set policies can drive up travel expenditures, undermine the rate negotiation process and create issues with safety and security.
For some hoteliers, on the other hand, the rising segment presents a new source of potential demand.
Loews Hotels, for example, later this year will unveil a comprehensive program to “support the needs of the unmanaged traveler,” said Steven R. Spivak, VP of transient sales for the New York-based owner and operator of 18 luxury hotels and resorts.
“This program will combine rewards, recognition, experiences and travel support in a way that gives the unmanaged traveler everything they need to succeed because we understand that they are part of a collective that is exponentially powerful and valuable,” he said.
While Four Seasons Hotels and Resorts has yet to develop a specific program tailored to the rogue traveler, Don Jones, VP of corporate and travel industry sales for the Americas, said the company is acutely aware of the segment and draws a significant portion of demand from business travelers via their retail rate.
However, he said the phenomenon also weakens the value of the luxury chain’s negotiated corporate accounts.
“The managed travel program, your ability to drive share and live up to the commitment that you’re willing to commit to a property is very valuable to us in the negotiation process,” he said.
Steven R. Spivak
Loews Hotels & Resorts
“From the hotel perspective, it can almost be a source of leverage,” said Carroll Rheem, senior director of research at Sherman, Connecticut-based PhoCusWright.
“It’s tough from the company side in the sense that they’re all about the buyer power,” she said. “They want to have and control as many bookings as they can because that’s the source of what they have to negotiate with. If you have a lot of rogue travelers … that’s tough from their angle.”
The rise of ‘rogues’
Underlying the trend is the proliferation of new distribution channels that make the hotel search and booking process easier than ever, sources said. But just as tracking each and every platform is difficult to catalog, so too is it challenging to measure the extent and size of the emerging unmanaged customer segment.
According to research from the Global Business Travel Association, travel managers said 78% of their travelers are usually in compliance.
Research from PhoCusWright confirms that general sentiment.
“Most of the travelers that do go rogue do so on a very occasional basis,” Rheem said, adding that a little more than half of business travelers book independently at least occasionally.
Only 45% of travelers always stick to the corporate policy, she said.
Most often, the main driver of that behavior is convenience, Rheem said. Perhaps a meeting is too far away from a city’s preferred hotel. Perhaps the preferred property is sold out.
“There are typically extenuating circumstances that drive it,” she said.
The second most common reason for rogue behavior, according to PhoCusWright research, is price.
“Tthey book whatever brand has the best prices,” Rheem said. While business travelers do not pay out of pocket, they are operating within increasingly tight travel budgets. “They are quite (price-sensitive),” she said.
“Loyalty is also a significant driver,” Rheem said. One in five business travelers who do not follow their corporate policies at least occasionally cite loyalty points as an influence.
An additional one in five travelers said they go rogue because they travel to destinations that do not have any preferred hotels within the policy. This is most common with smaller companies that do not have comprehensive travel programs, Rheem said.
Another factor is sheer ignorance, said Joseph Bates, senior director of research for the GBTA. Travelers rarely book outside of corporate policies on purpose, he said. “They’re often just not aware or not aware of why (the policies are) in place,” he said.
Pitching the perfect platform
The best way for hoteliers to reach this potential source of demand is by making travel as easy and seamless as possible, Rheem said.
A lot of that has to do with existing supply, she said. Chains that offer convenient locations in key cities automatically have an advantage.
But almost as valuable is the booking platform itself, Rheem said. Business travelers want the process to be quick and painless. Anything hoteliers—or travel managers, for that matter—can do to make that happen is invaluable.
“You’ll have to build something they want to go to. You have to have the carrot. You have to have something that they know is an effective tool to manage travel as opposed to, ‘This is something my boss wants me to do,’” said David Cush, president and CEO of airline Virgin America, last week during the “Luminaries of Travel CEO Panel” at the Global Business Travel Association Convention.
Hotel sales executives and corporate travel managers would do well to study the leisure landscape, Rheem said.
“I can see how decision making on the leisure side has influenced business decision making,” she said. Variables that never used to matter to corporate travelers, such as user reviews, are now becoming big factors in the booking process.
“It’s important for (hoteliers) to recognize the decision-making process often coincides with leisure channels regardless of where the booking gets made,” Rheem said.
Hoteliers have an opportunity to intercept that process by showing their offerings and expertise through intuitive digital platforms, she said. Even if it is something as simple as recommending certain routes from the airport to hotel to avoid traffic during rush hour, corporate travelers will take notice and appreciate that value.
“Little touches like that to build the base of loyalty in unfamiliar areas go a long way,” Rheem said.