Companies that don’t check negotiated rates are leaving piles of cash on hotel front desks. That’s the finding that emerged from analysis of BCD Travel client data recently reported by industry news outlet The Company Dime. An excerpt of the article is republished here.
The analysis found:
- Without standard rate audits, a company spending about $20 million annually on hotels overpays by $490,000.
- The same company would save about $900,000 per year using both rate and availability audits.
- If BCD’s top 50 clients did not assess and correct hotel rate errors, it would cost them $30 million more than if they implemented standard GDS rate audits that could provide the information they need to fix errors.
- Add global rate availability audits to the GDS audits, and those same companies would save a combined $55 million.
- Companies with hotel price assurance* programs save of $110,000 for every 50,000 hotel bookings.
*Hotel Price Assurance is available in North America; in initial launch in the U.K. and Ireland; and is scheduled to roll out globally later this year.
BCD hotel expert Dave Mitchell said rate and availability audits, as well as price assurance, should become standard for every corporate hotel program. “There’s a return on investment for every one of those services,” said Mitchell, senior vice president of Supplier Relations & Global Hotel Strategy for the travel management company.
“Hotels can put into place dynamic room management and pull rooms out of inventory,” he explained during a session at an Association of Corporate Travel Executives meeting in New York in April. “It limits the opportunity to use corporate negotiated rates. That can push average daily rate up.”
Although 2018 rate negotiations won’t heat up until later this year, hotel sourcing strategy is top of mind for many buyers as the Marriott-Starwood merger for the first time is set to impact corporate negotiations.
“Hotel contracts and RFPs [requests for proposals] continue to get more complex,” Mitchell said. Many buyers, hoteliers and their partners agree that the traditional approach to hotel sourcing doesn’t work very well; the trouble is coming up with another way.
Attendees to Mitchell’s ACTE panel discussion heard a few perspectives. TripBam’s Steve Reynolds noted his desire to “kill” the RFP process. Mitchell said BCD favors a diversified approach using traditional negotiated rates and market pricing. Rather than killing the RFP process, he said, clients should “take some steps” toward that.
“You can put in with preferred partners both fixed and dynamic negotiations. A little like the 80/20 rule,” Mitchell explained. “You can layer in chain programs to cover secondary markets and sold-out situations. Also, use tools for spot purchasing, a little like a lowest-fare program. Lastly, you should bring in a rate assurance tool to monitor rates and offer lower rates to a traveler even after they have purchased. It can be at the same hotel.
“All this should give you the ability to manage dynamically in that environment and message travelers to let them know rates are peaking,” he said.
Learn more about hotel pricing and savings strategies for today’s market by reading Rate Expectations: Is Dynamic Hotel Pricing Coming of Age?, a paper from business travel consultancy Advito.
