Everyone knows that hotel rates vary by market, season and when the room was booked. However, no one would describe hotel pricing as intuitive. Take the San Francisco market. The federal government estimates that the median rate for October of 2016 will be $250. Travel rules applied by government agencies will reflect this amount. However, a search for hotels on October 5th in a corporate travel system returns a median hotel rate of $409.
The rate is high because a very large conference will be held on this day. In fact, there are more people attending this conference than there are hotel rooms in San Francisco.
Why are traditional travel rules unfair?
However, a hotel reserved at this rate would violate your typical travel rules. Hotel rates in a traditional travel policy are based on average prices in the market and month of the year. They do not take into account large conferences, days of the week, sub-market, length of stay, advance booking time, and other factors which have a significant impact on room rates. As a result, the company may not reimburse the employee for the full cost of the hotel.
Similarly, most managers reviewing an expense report for this hotel stay will question the cost. They may not know that the conference took place or how much impact it had on hotel prices. They don’t have time to research hotel costs on different web sites. Even if they did, most expenses are reviewed after the trip was completed and hotels don’t show rates for nights in the past. The manager may conclude that the employee didn’t use travel funds responsibly.
What can you do to address this situation?
A few common sense steps and the right travel software can solve this conundrum.
- Set a travel policy based on the median rate in the market rather than a flat rate per night.
- Use a travel booking tool that calculates the median rate and shows which hotels are out of policy.
- Have the travel system notify a manger when a trip is booked. Trips which are too expensive can be cancelled without penalty.
- Show the expense approver the rates available at the time that the booking was made. This gives the approver enough information to decide whether the travel funds were spent wisely.
Contact us to learn more about creating the right hotel policies.