Corporate Trade- an emerging trend in Canadian hospitality

By Adam Koppelman, VP/ Director Investments and Trade Partnerships

In today’s cost-focused business landscape, many organizations are reducing or eliminating cash expenditures on annual sales meetings, corporate events, sales incentive trips, and contest prizing.  This is no doubt impacting the travel and hospitality sector in a big way.

According to Deloitte’s 2012 Navigate Study, Canadians are travelling less for business over the past year, with an 11% decline in domestic and international travel intentions. And those that do plan to travel, intend to shorten their stays.

In addition, the industry is increasingly commoditized, with 65% of the Deloitte survey respondents indicating that price is their top consideration in selecting a travel destination. Canadians looking to save while they are travelling are most often willing to make trade-offs with their accommodations, in favour of spending elsewhere.

It is no surprise why online travel agencies (OTAs) are continuing to have a big impact.  The HAC Annual Travel Survey shows 51 percent of travellers think they can get a better deal through an OTA, with the biggest changes being seen in the business travel community.

Meanwhile, funding for the Canadian Tourism Commission (CTC), Canada’s national marketing agency, has declined from $100 million in 2001 to $72 million in 2012 and $58.5 million in 2013.

Given all of these factors, the travel industry is clearly fraught with the challenge of balancing cost efficiencies with new revenue streams, increased advertising, and customer acquisition strategies.

So what’s a hospitality provider to do?  Many are turning to Corporate Trade as a solution.

Corporate Trade businesses, like Active International, enable tour operators, hotel chains, airlines, and conference centres to use their room/flight/seat inventory to help fund anything from TV ad campaigns and digital activity, to printing, freight, and capital equipment such as in-room televisions and furniture.

Let’s use hotel groups as an example. As noted, many hotels are faced with taking a write-down on their room rates due to competitive pressure from OTCs.  Through Corporate Trade, a hotel chain can exchange their rooms at full market value in return for a credit which they spend on advertising to build their brand loyalty. The Corporate Trade company then sells the rooms they’ve acquired to its customer base, driving new business to the hotel, and creating a win-win-win.

Use Corporate Trade to help offset cash expenditures for business travel and meeting expenses.

Essentially, Corporate Trade enables hotel businesses to keep at-risk budgets whole, and provides new business revenue streams by helping to maintain their ADR (average daily rates) and REVpar (revenue per room).

There are four types of Corporate Trade deals that are popular with the travel and hospitality sector:

• Bill Payer – any hotel, airline or venue that has expenditure for refurbishment, such as new carpets, flat panel monitors, or linens can use a Corporate Trade company to fund the purchase in return for a multiple of their inventory, such as hotel rooms, meeting space or seats.

• Cross Purchase – working alongside the travel partner’s media agency the Corporate Trade company places an agreed amount of the planned media expenditure. In return, the Corporate Trade company will guarantee additional incremental cash business expressed as a percentage of the media campaign traded for.

• Contra Transaction – a straight trade where the travel business pays for media space using rooms or airline seats

• Cash and trade (for hotels only) – the Corporate Trade company handles a media campaign for a hotel group for which they pay partly in cash and rooms.  The Corporate Trade Company provides rooms to a media owner, for example for a conference, because the media owner has paid for the conference with the provision of a media buy.

The Corporate Trade model is proving to be effective for the travel sector.  Around the world, over the last year Active International has experienced a significant increase in media procurement for the travel sector.

In today’s tumultuous times, if you haven’t considered Corporate Trade as a strategic solution for your travel business, you may be missing out on a hidden competitive advantage.

Your turn: Are you a business in the hospitality sector affected by any of the factors above?  How are you responding?

Getting to Know Us: Amy Wolchock

In our newest segment of “Getting to Know Us”, I spoke with the wonderful Amy Wolchock, Key Account Team Leader.

Explain your job as you would to a 5-year-old:

I work with a talented, dedicated and passionate group of people that make it fun to come to work; similar to going to school and being with your friends!  My job is multi-faceted, but the easiest part to explain to a 5 year old is that I place television and radio commercials on stations for you to see and hear.  It is much like putting a puzzle together and trying to fit all the pieces in the right place to create a beautiful picture.

Why Your Role and why @ Active?

Through hard work and dedication, I was promoted to Key Account Team Leader.  Every day is an adventure which keeps things interesting and exciting.  I enjoy the everyday challenges and successes which enriches my time here.

Most memorable moment at Active so far?

Our team building event in Niagara Falls with our New York office and Toronto office.

Tell us about your charitable cause of choice and the last thing you did to support it?

I have most recently made contributions to the Heart Association and the Cancer Care Society, both of which are important causes to my family and I.

If you weren’t in your current career you would probably be ……

… a lawyer.  I like to analyze issues from all sides, present my case, and form my own opinion.

Adjective your family would use to best describe you?

Caring

Adjective your Customers would use to best describe you?

Trusting

Adjective your best friend would use to best describe you?

Loyal

Biggest Trend Impacting Your Area of the Business To Date?

The digital and mobile landscape is constantly changing and advancing. In response, we must constantly educate ourselves and our clients on the newest tools and assets available and how Active can provide more value and innovation to our clients’ advertising campaigns.

What’s the most innovative thing you’ve seen a customer do to unlock value from their assets?

One of our customers had to find a solution to a laundry detergent disc that would not dissolve in water. The disc was compressed to the point that it failed to dissolve and clumped in the wash.  Active’s remarketing team worked with the customer to have the discs ground up to a powder and had it relabeled into 5 gallon tubs to sell under private label so as to not compete in the market with their current products. The idea was ingenious and brought value to our customer.

Favourite Ad of all time?

The Back To School Staples ad where the dad is dancing down the aisles in the anticipation of school starting.

Corporate Trade Industry Report: November 16, 2012

Digital Pop-Up Stores

As lives become busier and consumers demand faster access to information, products, and ideas, marketers are constantly looking for new ways to deliver brand messages to consumers on the go. An exciting new innovation in digital marketing has emerged that has the potential to revolutionize the way we do our shopping. Digital “pop-up stores” are making an appearance and are causing quite the stir.

This month, Walmart and Mattel launched their first test-store in downtown Toronto near Union Station.

Mattel and Walmart^s digital pop-up store located in downtown Toronto^s PATH system near Brookfield Place.

The digital store is essentially an elaborate billboard design with product images and information. The billboard showcases a select product offering from Mattel with corresponding QR codes. Consumers can scan the codes and purchase the toys on the spot. Products are then shipped directly to the buyer’s home.

Busy parents, who are faced with an often-times hectic commute, can get a portion of their Christmas shopping done without having to step foot in a store or having to surf a website. Walmart and Mattel aren’t the first to come up with such an innovative digital marketing strategy. Tesco has been using interactive billboards over the past year for groceries and other home goods in a variety of locations including Gatwick Airport and South Korea. These digital stores have married OOH advertising with online capabilities.

So what does this mean for marketers? We’ve seen the decline in traditional “bricks and mortar” stores and an increase in e-commerce. But here is a new trend that seems to be a combination of the two ideas that encompasses out of home advertising. But with a new marketing idea comes the question on how can a company afford to test-drive yet another marketing technique without taking away from traditional outlets?

By using Corporate Trade a company can use under-utilized assets to off-set the costs of an interactive OOH display. As Christmas merchandise is being displayed, what happens to the autumn-themed inventory? Using Corporate Trade can allow a company to use past-season stock to fund a current season’s media campaign, and to foray into the exciting new realm of digital pop-up stores.

A digital marketing campaign that allows me to purchase Christmas presents without having to enter a hot, overly-crowded mall while I’m on my usual commute? That’s an idea that certainly puts me in the Christmas spirit.

By: Andrea Allen