Companies aren’t getting the hotel rates they negotiated, study finds
Every fall, corporate travel managers and travel management companies expend a lot of time and energy on the annual ritual of negotiating rates for their preferred hotel programs.
More than a few dollars and months go into the process.
A new study by the Global Business Travel Association finds that in many cases for many of the companies, the exercise is a waste of time.
Only a handful – 2% — conduct weekly audits to ensure that the rate they negotiated is the rate that appears in the GDSs; 7% check the rates on a monthly basis.
Other companies only check every couple of months (22%), once a year (31%) or every time the rate is loaded (33%).
Kate Vasiloff, research manager at the GBTA Foundation, says 27% of travel managers that participated in the study said they didn’t see the necessity for rate audits because they didn’t think errors had a significant impact on their programs.
But the study found that when errors are uncovered, the average difference between the negotiated rate and the rate that is loaded into the GDS is 13%.
Most often, the error benefits the hotel, Vasiloff says.
And errors are not few and far between. HRS, one of the largest providers of corporate hotel inventory in the world, jointly sponsored the survey and contributed an analysis of 23,000 hotel rates.
It found that about 25% of the rates analyzed were incorrect or failed to correctly incorporate amenity details.
Amenities can eat up a lot of the benefit a negotiated rate should be providing. In 16% of the analyzed rates, a breakfast that should have been included was not, or it was provided at a higher cost than negotiated.
With the cost of breakfast ranging from $10 to $20 at many hotels, the extra expense adds up. It has replaced free Wi-Fi as the amenity most likely to be mishandled.
Jeff Hillenmayer, head of corporate hotel sourcing for HRS Americas, says rate loading accuracy has improved in recent years, particularly for large chains. The chains also tend to use rate-audit services. (HRS just rolled out Rate Protector, which catches errors and initiates corrections.)
But for the most part, rate loading is “still mostly done by temps or interns”, Hillenmayer says.
Post-loading checks are performed in an equally haphazard manner.
“After a four- or five-month RFP process, travel managers will ask the TMC to check the rates, or – even more mind-blowing – they’ll ask the traveler to report incorrect rates.”
A traveler, no matter how budget-minded, is not likely to have the correct rate at hand and is even less likely to know what is included.
Even fixing a rate problem can be a hassle.We’ll call the hotel and they won’t know what to do to correct it,” Hillenmayer says.
“We’ll call the hotel and they won’t know what to do to correct it,” Hillenmayer says.
There’s a lack of understanding of how big the problem is, he says.
“It’s a black hole that is not getting the attention it deserves.”
Michele McDonald is a senior editor at Tnooz. She has worked as a journalist covering the travel industry for more than two decades.
She is a former managing editor of Travel Weekly (US) and former editor-in-chief of Travel Distribution Report.
In 2002, she founded Travel Technology Update, a newsletter for distribution professionals. She remains editor and publisher of Travel Technology Update. She also contributes to Air Transport World.