Tag Archives: effective travel policy

Negotiated hotel rates helps you stretch your travel dollar!

Negotiated hotel rates make travel policies more effective!

Negotiated hotel rates are one of the most powerful ways to save money on corporate travel. These rates may save companies anywhere between 20% to 50% on their hotel expenses. In fact, corporate negotiated rates represent almost 30% of US lodging industry revenue.

It is a common misconception that only large corporations have the market power to negotiate a lower rate with hotels. On the contrary, companies that spend as little as $5000 in a particular market can be successful in negotiating a preferred rate for themselves.

How to get access to negotiated hotel rates?

The following steps will help you negotiate a lower rate.

  1. Identify the markets where your employees travel to frequently.
  2. Calculate the total number of room nights you expect to spend in each market. These figures may be monthly, quarterly or yearly.
  3. Locate the destinations (such as offices, conference centers, etc.) in each market where your employees are traveling to. Find hotels that are convenient for the business purpose.
  4. Send a “request for proposal” to the sales manager at each property. This is also known as an RFP, for short.
  5. Review every RFP and then select preferred hotels.
  6. Put a process in place to ensure that your employees make reservations at the said property. You will also need to ensure that they utilize the negotiated rate.

Does this sound like a lot of work? Of course it does! How will you gather all the data? Collating this information can be very hard for companies using antiquated systems and processes. However, organizations using the right software can access the data with a simple click.

How many room nights did my company use while traveling to destinations within three miles of downtown Chicago in 2015? Click.
What was the average room rate that we paid? Click.
What were the rates offered by other hotels of similar quality? Click.

How to ensure that your employees take advantage of negotiated hotel rates?

How do you make sure that your travelers actually book rooms at the hotels you have chosen? After all, travelers  have every incentive to stay at hotels that give them the most miles or reward points.

Luckily, an effective travel policy and the right software makes the process work. With the right tools, you will be empowered to do the following.

  • Write a travel policy which requires your employees to book hotels through your travel system. Use an integrated expense system to flag hotel reservations booked through other channels for review.
  • Configure your travel system to highlight negotiated hotel rates at the top of the search results.
  • Alert managers by email when a traveler chooses a rate that is more expensive than the negotiated rate. Configure your expense system to flag such reservations for further review.

We let you do all of the above and a lot more. Feel free to contact us right away to request a demo.

A travel policy should have clear rules, not vague guidelines!

Business travelers should use the same care for spending company funds that they would use with their own money. This should be the basic premise for an effective travel policy. However, we have seen travel policies so vague that they allow policy violations. At times, they may even encourage business travelers to spend more than they ever would with their own money!

A case in point would be this travel policy from a prominent university. It states that airline fees for services including “convenient or early boarding, extended legroom, seat location, baggage, in-flight meals, [and] Wi-Fi service should be incurred responsibly and should not be excessive.” This vague rule leaves the traveler to determine what is responsible and what is excessive. It provides no guidance regarding this.

Seat 24J would violate an effective travel policy.

Seat 24J would violate an effective travel policy.

The seat map above shows an aisle seat in Row 24 which costs $75 and an aisle seat in Row 27 which has no fee. Does a seat on Row 24 provide more legroom, free drinks, priority boarding, or other perks when compared to Row 27? No, it does not! It just gives the traveler more miles or points and lets him leave the plane a few seconds earlier. Who is paying the extra $75? Employers with vague travel policies!

How can the above travel policy be more effective?

Making a travel policy more successful is easier than one may realize. An effective rule would say, “Travelers may spend up to $10 for each hour of flight time to purchase a window or aisle seat when no window or aisle seats are otherwise available.” Such a rule does the following.

  • It balances the comfort of the traveler with the need to spend the organization’s travel funds responsibly.
  • It clearly demarcates expenses that are acceptable from those that are not.

A corporate travel booking solution can tell employees whether they may purchase seats as they view the seat map! Such tools take into account the following.

  • The duration of the flight.
  • The availability of aisle and window seats.

Adding the said rule to the online booking solution is important because it ensures that travelers do not need to commit the rule to memory. However, they cannot claim ignorance of the travel policy after they have purchased their ticket either.