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.
Travel rules will only be effective if an organization uses real time hotel rates.
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 traditionaltravel 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.
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.
We let you do all of the above and a lot more. Feel free to contact us right away to request a demo.