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Business travel is back with a bang, with the overall market expected to touch around $1 trillion this year. As travel managers gear up to tackle the increasing travel requests, the first question that comes to their minds is reducing trip spends.
However, it is not possible to reduce the overall trip costs if you don’t succeed in optimising the costs spent on hotels. As business travellers spend 30-50% of their trip costs on hotels, you need to partner with frequently booked hotels to get corporate deals.
To secure a good corporate deal for your frequently used hotel, you should be armed with month-wise statistics on the dollars spent and the number of nights consumed. If you commit to a fixed number of nights per month, hotels are likely to offer you special discounts below their standard rates.
Here are 8 tips for negotiating corporate hotel rates like a champ.
The first step toward getting a great hotel deal is to know your travel spending trends. Evaluate your recent travel data and identify the cities where most of the travel happened. Project how many room nights you are likely to purchase in the year ahead.
Once you have this baseline, dive deep into your recent hotel data. For cities where most of the travel happened, identify the hotels that are frequently used by your travellers. Now, you are armed with the right set of hotels to negotiate with.
Once you are ready with your hotel list, it is time to identify alternates. Most great hotels have a reasonable alternative in the same area. Business travellers are often pressed for time and miss out on such alternatives.
When you initiate a negotiation, write to your preferred choice and the alternative. This would help you easily benchmark not just rates & discounts but amenities and other inclusions. As negotiations progress, the corporate hotel rate information from your alternative is a good bargaining tool to extract the most value.
Most hotels dynamically change their rates daily. You must have seen hotel rates rise dramatically during the New Year’s holiday. These variations are a response to changing occupancy, seasons, and several other factors.
However, for companies, many hotels also offer a Company Volume Guaranteed Rate (CVGR) – a rate that is fixed throughout the year. Much like the name, companies inevitably give hotels consistent business and hence get rewarded with fixed corporate hotel rates.
Make sure you check with the hotel if they offer a CVGR rate. Even if the hotel doesn’t offer this rate plan, don’t forget to check for a discount on the dynamic rate. By guaranteeing room nights to a hotel, you can maximize the discount you get.
Your deal negotiation journey isn’t over yet. Business travellers cancel much more frequently than others. An important clause to include in the deal is a favourable cancellation window.
The cancellation window is the time limit before check-in time, where you can cancel a booking without being charged for it. Ask the hotel about the cancellation window they offer. Most hotels are likely to offer a cancellation window of 48 hours.
However, you can negotiate the cancellation window to a 12-hour window, especially if you are guaranteeing room nights to the hotel.
The next order of business is to negotiate a retention charge. Retention charge is the penalty levied by the hotel, in case of cancellation outside the cancellation window, no-shows, or early departures. Enquire with the hotel about their retention charges and associated terms and conditions. Most hotels charge one night’s tariff as retention charges.
If the retention rate is higher, negotiate it down to a more favourable charge.
While negotiating the deal, don’t forget about the meal plans. Most hotels offer one of the four most popular meal plans –
The corporate hotel rates offered to you will change based on the meal plan. An American Plan is likely to be costlier than a European plan. Therefore, carefully consider the plan you want and whether the rate differential is justified based on your traveller’s past behaviour.
Hotels offer differential rates for multi-occupancy. It is important to negotiate a multi-occupancy rate carefully. Pay extra attention to hotels where multi-occupancy is likely. E.g., a hotel where your new hires stay.
Double occupancy rates are often provided at a marginally higher rate than a single occupancy rate. You can also ask the hotel whether you can accommodate another person in a single-occupancy room. If yes, what are the charges and services included?
The rate offered also varies based on the add-on services included. Hence, while negotiating the deal, please enquire which add-on services are included. A hotel may include the following add-on services –
By foregoing some or all of these services, you can drive a harder bargain and create additional savings.
Although you may be able to get the best corporate hotel rates, the procedure can take a toll on your travel manager. Searching relevant hotels, setting up meetings, and negotiating the right deal can be exhausting.
ITILITE partners with some of the most popular business hotels to offer competitive corporate hotel rates. What’s more, we partner with Travel Managers to analyse their hotel policies, spend patterns, and existing hotel preferences. We work collaboratively to negotiate the best corporate deals on their behalf and help them build a world-class travel program.
Get in touch with our Sourcing Experts to know more.