Large hotel groups are aggressively promoting a fixed discount across their brands, which may add up to thousands of hotels. A guaranteed discount across so many properties may sound attractive, but travel buyers should beware.
Discounts come at a price
Hotel chain brands now range from economy to luxury, meaning they can meet almost every accommodation need. Because of that, hoteliers expect corporate travel programs to pledge even more market share. But that same variety makes it hard for companies to meet suppliers’ requirements when travelers have so many hotels to choose from.
Another complication: Chainwide discounts are fairly small—usually 4% to 6%, and sometimes as low as 3%. That’s less than what you probably could negotiate with a specific property, and they’re typically non-last room availability (NLRA) rates, meaning they’re not always available.
Hotel buyer beware
In BCD Travel’s 2020 Industry Forecast, the hotel experts behind Stay by BCD Travel™ advise corporate travel buyers to choose one of two strategies for chainwide discounts. Either avoid them altogether and rely on other hotel sourcing strategies, such as dynamic hotel rates or rates negotiated by your travel management company. Or proceed with caution.
Tips for negotiating chainwide hotel discounts
If you do go after chainwide discounts, follow these guidelines:
- Apply the discount only to a selection of the group’s brands.
- If your TMC agreement includes commission sharing, be aware that hotels often don’t pay commission on chainwide deals, and this could increase the total cost of purchase.
- Don’t make chainwide deals with all hotel groups.
- Monitor the performance of chainwide deals. Track your average booked rate for the chain, and compare it to best available rate (BAR).
Stay by BCD Travel is designed to take advantage of shifts in the hotel marketplace and allow corporate travel buyers to get more value from their programs with less effort. It targets spend management strategies such as merchandising and market-level rate targets. Companies can take advantage of hotel rate availability management, analytics and traveler engagement services.