Although hotels are meant to provide a place to rest your weary head after a long day of meetings, finding a hotel that fits your budget and overall travel policy can be nothing but a headache for travel or procurement managers.
Hotels make up a huge proportion of travel spend for many organisations, but are at the same time an area of business travel in which it can be difficult to receive value for money due to fluctuating, and sometimes misleading, prices.
We put a handful of our customer’s most common hotel-related questions to our Head of Operations, Chris Vince, to get some expert advice on how your organisation’s hotel programme can deliver the very best results:
“Which rates should we be focusing on and which rates will we trip up on?”
It can be tempting to head straight to the corporate rate when it comes to hotels, as in theory it’s meant to be favourable to business travellers and should be a more cost-effective rate than usual. However, this is often a static rate and so isn’t truly reflective of the average room rate at certain times of the year, which is why it’s worth being clued up on different types of hotel rates and how to work these into your hotel programme:
– Rack rate – The hotel rack rate is the price a hotel charges for a room before any discounts have been applied. It is sometimes referred to as the published rate and is usually set artificially high, which means that discounts can look extremely generous by comparison. This is most commonly used during the benchmarking process.
– Best available rate (BAR) – Best available rates essentially provide consumers with the most appropriate room cost at any given time by predicting the demand for rooms and lowering or raising the price accordingly.
– Corporate rate – This is a room rate that is lower than the hotel’s standard rate, offered by the hotel to business customers in exchange for a high frequency of bookings. This is static throughout the year and is usually pitched somewhere in the middle of changeable rates.
– Last room availability (LRA) – As long as a hotel has a room for sale, even if there is just one available, then organisations with an LRA clause have the right to buy it at their contracted terms and prices. However, this does usually come with a premium of £3-5 outside of London and anything up to £10 inside of London.
– Dynamic rates – These rates come at 10% off the BAR rate every day of the week. At certain times of the year this might work out at a great price, whilst at others it might come in at well over the odds, so it’s always worth checking this out properly.
“Is billback important to a hotel programme?”
Hotel billback is a way of allowing a business traveller to stay at a hotel without having to pay their hotel bill on departure. Instead, the hotel bills the traveller’s travel management company (TMC) who then invoices the traveller’s organisation. This is often preferred by travellers, as it means that they will not have to pay for the room themselves and then claim the cost back through expenses. However, it’s worth bearing in mind that billback is not available at all hotels. Your online booking tool should clearly state whether billback is available at a selected hotel; if not, then speak to your TMC to see whether this can be arranged for the future.
“We’re looking to reduce our hotel spend further, but we also want to keep our travellers happy and ensure that they have a good experience when travelling. Is there a way we can do both? Or is it really a choice between one or the other?”
A cost effective way of improving a traveller’s experience of a hotel whilst also being mindful of budget is to enquire into what added value options a hotel can include in your rate and then to secure these within your hotel programme. Free breakfast, laundry or WiFi are all popular ways of improving the comfort of a traveller’s stay that come at a low cost for the hotel, but high value to your travellers.
“Is it worth including budget hotels in our RFP? Or are we just asking for increased noise from our travellers in the long run?”
Budget hotels have, in the past, suffered from an image problem, often being perceived as substandard accommodation that offers nothing more than a cheap rate and as such travellers can be resistant to using them. However, budget hotels have recently undergone a makeover and have been forced to shape up. The budget hotel sector is growing rapidly and about 50% of all hotel openings next year will be by budget hotel groups.