Pitfalls of hotel leisure pricing for business travelers
In a new twist on dynamic pricing, hotels are increasingly undercutting negotiated rates by offering business travelers the lower pre-paid rates normally associated with leisure stays. The catch for business travel buyers: These pre-paid rates are often non-refundable.
This is among several findings in Advito’s newly released 2016 Industry Forecast Update, an infographic guide to what’s ahead for business travel in the coming year. The shift in dynamic pricing for hotels reflects hoteliers’ increasing sophistication in using technology to better target business traveler—and treat them as they do leisure travel consumers, explained Advito hotel expert Marwan Batrouni.
“Some chains are experimenting with different ways to reach and attract business travelers directly by offering them perks they may not always get if they go through other booking channels,” said Batrouni, senior director and practice area leader of Advito, the consulting arm of BCD Travel.
“Travel managers need to get their travelers engaged so they can influence their behavior,” Batrouni advised. “It begins with a clear travel policy. From there, travel managers need to prompt smart traveler decisions before, during, and after a trip. Business travelers are consumers and may easily react when they see lower rates, but if they’re aware of the pitfalls, such as non-refundable rates, cancellation fees or the ways out-of-policy booking has a negative impact on preferred hotel volume, they’re more likely to stay with the program.
“The importance of providing travel buyers with rate visibility and insight into their hotel program has become critically important,” he said. Right now, hoteliers have the upper hand in understanding traveler behavior and using this knowledge to their advantage to control inventory, availability and accessibility of preferred rates.
“But travel buyers who are armed with rate intelligence, such as how often are their preferred rates are available—or not—and how often best-available rates differ from negotiated rates can level the playing field,” Batrouni said. “This intelligence, combined with a clear understanding of their own spend volume, will allow travel buyers to challenge suppliers when it’s necessary to protect their program.”
Want to know more? Read the full 2016 Industry Forecast, and ask your account manager how BCD Travel and Advito can help you prepare for the future.
