Expert Insights

5 reasons small and independent hotels offer great value

6 July 2016 by Leigh Cowlishaw

Five things to keep in mind when considering independent hotel suppliers, or those which are part of smaller collections.

To get the best value from preferred hotel programmes, travel buyers and procurement departments have to make sure their business travellers are actually using them. The volume of hotel bookings they can give each preferred supplier supports the rate negotiations we manage on behalf of our customers. With more bookings, we’re more likely to be able to secure favourable rates the following year. But it’s a myth that only big accommodation brands, rather than small or independent hotels, can give buyers good rates in such negotiations – especially in the UK market.

Capita Travel and Events is proud to successfully manage a small vendor initiative called “The Collection”. It ensures that smaller, independent hotels and serviced apartments are placed on a level playing field with the larger accommodation groups, and offers customers plenty of variety and choice.

Here are five things to keep in mind when considering independent hotel suppliers, or those that are part of smaller collections, for your preferred programme…

1. Hotel locations

The UK hotel market is a complicated and fast-moving place. There is no one accommodation chain that could easily satisfy every corporates’ every need, everywhere. We looked at all of the room rates that we negotiated on behalf of our customers for 2016. Of all the rates that were agreed and contracted, no single chain had more than 10% of the total.

The gaps are being filled by many of our smaller hotel partners. The number of these small or independent hotels signed up to The Collection has grown hugely in the last five years. Many of these properties are also heavily represented in our Traveller First programme  – partners we’re working with to bring our customers added-value benefits such as inclusive room upgrades, fitness classes or other extras. That’s in no small part down to these suppliers’ willingness and ability to meet our customers’ business travel needs.

2. A fragmented market

The fast-evolving hotel marketplace in the UK differs greatly to that of the US, where big brands tend to dominate. On this side of the pond, the hotel sector is very fragmented, despite some big mergers and acquisitions in recent years (and more to come). Many boutique and independent hotels are flourishing.

Customer fragmentation isn’t new to the hospitality sector, of course. But the success of the boutique-hotel sector following the 2009 economic crisis showed that many travellers and businesses were comfortable moving away from the rigid standards of “legacy” hotel brands – the traditional big players.

3. A unique accommodation style

Apart from the essentials, many business travellers, and perhaps millennials in particular, are looking for something different in a hotel. A “cookie cutter” hotel brand, where every property is meant to offer a consistent experience, can become wearisome to a frequent traveller. As guests, we have certain expectations for any hotel we stay in on business, such as Wi-Fi, clean rooms and great service – but sometimes individuality has an added appeal.

An individual or boutique-style property with a unique approach or design style can be very attractive to travellers. And that can only be a good thing in the travel manager’s fight for compliance with their negotiated hotel properties. With changing economic situations in some regions bringing in younger workforces, the draw towards more boutique and independent hotels could change the supplier landscape.

4. Local economic growth

The manufacturing site and business park i54, located at the gateway to south Staffordshire, offers a great example of how changing local economies are driving small and independent hotels’ growth. It is prospering as part of a wider West Midlands renaissance. Direct foreign investment in the region has increased by 38% recently, and export growth has soared by over 100% in the last five years. Time will tell whether that growth will continue, but currently the area is thriving.

The infrastructure change is creating one of the UK’s best-connected manufacturing hubs. It saw Jaguar Land Rover move in with its fast-growing engine factory, followed by more businesses, including Porsche.

As a result, at least one budget hotel brand has been quick to invest in a new property in the area. Local independent hotels are also prospering. We’ve seen a number of new Collection accommodation partners in that area join us in the last few years.

That’s because smaller suppliers recognise that partnering with travel management specialists is a smart way for them to reach growing numbers of profitable business customers. It brings them access to all the distribution and booking technology we can offer.

5. Responsible travel sourcing

Many organisations, including plenty of our own customers, already have responsible sourcing strategies in place. Pushing business to small and local suppliers is often part of that approach, giving a boost to smaller accommodation providers.

We’re supporting growth in regions based on our customers’ profiles and, in turn, supporting small and independent hotels where they meet customer requirements.

Big brands vs independent hotels: is bigger always better?

Ultimately, location, price, traveller welfare and value matter more than the size of a property. We always recommend that customers take time to understand the accommodation their travellers are using, and why.

Our Collection properties can also look to us to provide business guidance and act as an industry sounding board, whereas larger accommodation groups might have some of those services provided internally. We aim to keep growing our independent offering. By coupling this with Traveller First, we want to continue to bring our customers value and choice, while supporting our suppliers’ market share and growth.

Whether travellers need global hotel chains, smaller or independent properties, or serviced apartments – or a combination of all these to meet their needs – the key issue is meeting traveller and business objectives. Our job is to analyse the data to see what needs to be negotiated, and incorporate those requirements into the RFP (the rate negotiations with preferred suppliers), no matter how big, or small, their brand. 

Interested? Let’s have a chat about your company’s travel, meetings and events objectives - from the stuff that keeps you awake at night, to the everyday experiences of your employees! Call us on 0330 390 0340, or submit your details below.