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Home >  BULLETINCorporates overspending on hotels by millions: BCD
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Corporates overspending on hotels by millions: BCD
Failure to use effective audits costs companies hundreds of millions of dollars per year in missed hotel discounts

23 May 2017

A multi-level analysis by BCD Travel of hotel rate auditing programmes reveals that combined, mid- to large-sized companies overspend on hotel room nights by hundreds of millions of dollars.

Without performing standard rate audits, a company overspends by $122,500 for every US$5 million it spends on hotels. Using both standard rate auditing and rate availability audits prevents $225,000 in overspending for every $5 million spent on hotels. Additionally, hotel price monitoring programs like BCD Travel’s Hotel Price Assurance realise a net savings of $110,000 for every 50,000 hotel bookings.

“Every travel programme should include standard hotel rate audits, rate availability audits and hotel price assurance,” says David Mitchell, BCD Travel senior vice president for supplier relations and global hotel strategy.

“Every one of those services yields a return on investment.”

Given the amount of time, effort and resources that companies invest in the negotiation and implementation of a preferred hotel programme, corporate buyers can’t afford to then overspend at their preferred properties, says Mitchell.

Realising a return on hotel sourcing requires companies to not only confirm that preferred rates are accurately loaded into the distribution system, but also to make sure negotiated rates are available for booking when travellers need them.

BCD Travel’s analysis examined programme effectiveness of clients taking advantage of three separate levels of hotel rate auditing:

  • Standard Rate Audits, which ensure negotiated rates are loaded into the GDS
     
  • Rate Availability Audits, which also verify whether negotiated rates are available at booking
     
  • Hotel Price Assurance, which audits rates post-booking to take advantage of price drops up until check in.

    The top reasons travellers are overspending include:
     
  • Negotiated rates aren’t loaded into distribution systems. BCD Travel found that 15-30 per cent of corporate rates aren't loaded during the first round of audits.
     
  • Hotels limit the number of rooms eligible for discounts. Through availability rate auditing, BCD Travel found hotels don't make corporate discounts available over 35 per cent of the time.
     
  • There is no single best source for hotel bookings. The rates for the same hotel room may be different depending upon where the traveler shops. Because rates fluctuate and sometimes dip below corporate rates, BCD can find a rate cheaper than the corporate rate 40 per cent of the time.
     
  • Sophisticated hotel pricing. Hotels have sophisticated pricing systems, and room rates change frequently. With Hotel Price Assurance, BCD can find a rate lower than the one originally booked about 15 per cent of the time.

To optimise travel spend and achieve the true potential of their buying power, companies today need to embrace new, more powerful and more forward-thinking sets of services now available, says Mitchell.

Companies can save substantially by booking with systems that shop across multiple content sources and that continue to shop for lower rates even after rooms are booked. As a best practice, corporate buyers should also compare preferred rates to fluctuating market rates.

Ensuring the availability of desirable rooms and rates is critical, because the success of a hotel programme depends on earning travelers’ confidence that they can find what they want in-programme.

 “Over the past five years, we have helped our clients avoid more than $80 million in hotel overpayments by conducting a range of historical, real-time and predictive auditing solutions that give businesses unparalleled insight into their discount programs,” says Mitchell.

“Too few customers are leveraging the analytics and new shopping capabilities to drive higher savings and higher traveler confidence into travel programmes. The capabilities are here. It’s time for companies to embrace them.”



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