Marriott’s acquisition of Starwood is set to change the hotel industry significantly. Carlson Wagonlit Travel’s (CWT) latest white paper, launched today, shows corporate travel buyers need to start thinking about the implications now and start planning how it will change their travel programs.
Scott Brennan, CWT EVP and Head of Global Supplier Management, said, “Consolidation in the hotel industry isn’t new but the Marriott/Starwood tie-up is likely to change the way corporate travel is bought and sold. Everyone has to think very carefully about what this means for negotiating corporate travel deals.”
In 14 of the world’s top 20 cities, the new hotel group will have nearly a third of the corporate travel hotel spend, rising to half in some places. Also, CWT’s analysis suggests Marriot, more than any other chain, has chosen not to take part in corporate travel RFP processes.
Brennan continued, “The implications are potentially huge. We think the new Marriott/Starwood group is going to have a lot of say in the market, which could alter the way corporate rooms are bought and sold. We don’t yet know the full impact and because the new group won’t be finalized in time for the negotiations this year, we won’t know until the 2017 negotiating season, in September next year.”
A further consideration is travel policy compliance. One of the travel buyer’s best negotiating tools is compliance because they can drive volume to preferred properties. However, CWT’s analysis shows 22% of non-compliant spend is with Marriott and nine percent is with Starwood.
Brennan continued, “According to a 2015 GBTA survey of corporate travel managers, hotel chain loyalty programs is one of the underlying reasons for non-compliant hotel spend. We don’t yet know what changes, if any, the new Marriott will make to its and Starwood’s loyalty program. But whatever happens, the new group already accounts for a large share of non-compliant spend.
“The combination of the new Marriott’s increased market share and the pulling-power of its loyalty program means it will be in a very strong position. After all, volume drives the discussion in the hotel industry. On top of that, where a player the size of the new Marriott goes, others will follow.”
Brennan concluded, “Our advice is to start planning now for your travel program negotiations. The more prepared you are, the better the deals you will be able to strike.”
CWT suggests corporate travel buyers take four steps now to start building their negotiating position:
- Assess key markets: look at share by top chain within key cities or areas within a city, assess alternative hotels and potential savings
- Prepare to have a more flexible approach for 2017, incorporating alternative suppliers as required
- Adapt your travel policy to ensure compliance
- Communicate to travelers, engage them in corporate objectives, and create shared ownership in the results
CWT’s Hotel Consolidation white paper is available here.