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.
- Identify the markets where your employees travel to frequently.
- Calculate the total number of room nights you expect to spend in each market. These figures may be monthly, quarterly or yearly.
- 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.
- Send a “request for proposal” to the sales manager at each property. This is also known as an RFP, for short.
- Review every RFP and then select preferred hotels.
- 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.