The MacNair Travel Leadership Blog

What Hotel Rate Increases Mean for Your Travel Program

Posted by Mike MacNair on Apr 28, 2016 12:00:00 PM

What Hotel Rate Increases Mean for Your Travel ProgramWhen it comes to corporate business travel, securing hotel rooms for your traveling employees is as important as booking the right flight. Access to clients or customers, the availability of good restaurants and additional hotel amenities all need to be taken into consideration to ensure your road warriors are satisfied and able to get their work done while they travel.

The latest information from the Global Business Travel Association (GBTA) and Business Travel Network (BTN) states that hotel rates are on the rise in 2016. In North America, prices are expected to increase about 4.3%, the largest increase compared to the other global region projections noted. Increased demand with limited supply is the biggest contributor to the rate increases, and hotels will continue to maximize ancillary fees and develop more stringent cancellation policies.

Armed with this information, SME’s need to consider what opportunities and possible challenges exist for the corporate travel program. As you consider your travel and entertainment (T&E) budget for the rest of this year, take a closer look at the following items, determine how they may impact your bottom line, and what opportunities exist to create more cost savings and overall budget predictability.

The Sharing Economy and Business Impact

Businesses like Uber and Lyft are already providing valuable transportation options for businesses, and Airbnb is gaining considerable ground marketing their lodging options to business travelers. A quick look at the Airbnb business-focused web site includes perks such as easy expense management, convenient locations, extended stays and the ability to save money on restaurant costs. For your road warriors on international or extended business trips, Airbnb may prove to be the best and most cost-effective option for your business.

Most importantly, SME’s must address the pros and cons of utilizing the services provided by Airbnb and decide if their travel and expense management system can handle the invoicing that comes with this new service. Once these issues and others are addressed, they need to be included in your travel policy and communicated to your road warriors. Through careful research and consideration, the Airbnb option may prove beneficial to your business; reducing lodging costs, increasing traveler compliance and providing a “just like home” option for your traveling employees.

Marriot/Starwood Merger Rewards Impact

The merging of Marriott International, Inc. and Starwood Hotels & Resorts Worldwide, Inc. creates the world’s largest hotel company. Many questions on how previously earned reward points would be utilized have arisen because of the merger announcement. According to Marriott’s web site, President and CEO Arne Sorenson states, “…we expect to run parallel loyalty programs while we engage in the complicated work of integration. During this period, there is no change to how you manage your Marriott Rewards account or book reservations, and you will maintain your existing member benefits…launching a newly combined program in 2018.”

Continual monitoring of how this merger moves forward will provide insight into the possible rate increase/decrease and changes in rewards programs that could affect your business.

Legacy Hotel Brand Changes

Legacy hotel brands are becoming more creative in what they offer business travelers. This trend coupled with the proliferation of brands is making it much more challenging for finance executives and travel managers to understand what exactly, travelers are paying for.

As new and different hotel options become available, ask for feedback from your road warriors on what best options are available based on price, what benefits them the most while on the road, and what makes sense for your business. Work closely with your travel management company (TMC) or travel procurement specialist to ensure the best room rates are secured based on needs, and work closely to understand what’s included in that rate, and what’s considered “extra.” By asking questions and paying close attention to rate details, you can more easily understand and reconcile lodging expenses. This will create a more cost-effective, easier to manage travel and expense system and increase control over the T&E budget.

Better Food and Beverage Options in Hotel Property Restaurants

An increase in hotel rates means an increase in expectations from businesses and travelers alike on food and beverage options for travelers. It’s the hotel’s best interest to keep their busy travelers on-site and in turn have started to offer better restaurant and lounge options. This saves time for your travelers and makes expensing food and beverage easier if it’s done through the hotel booking process. Road warriors can increase their overall productivity while travelling and expect less work collecting receipts and reconciling food and beverage expenses.

Ancillary Fees Will Increase the Costs of a Hotel Stay

Hotel ancillary fees (as well as airline and car rental fees) are expected to continue to rise in 2016. These fees must be addressed as hotels provide more options to personalize the reservation in ways that are not often considered. These fees drive up costs and create an account reconciliation nightmare for your finance team.

Utilizing travel and expense automation can significantly reduce the pain that comes with managing the additional fees associated with travel. In addition, track what ancillary fees are most commonly used and if appropriate, include these fees in your travel policy. This not only creates increased travel policy compliance, but also provides additional control into the overall travel and entertainment budgeting process by understanding where possible increases will occur.

By seriously considering the above impacts that rising hotel rates can have on your corporate travel program, the potential loss of savings to your T&E budget can be mitigated. Assessing potential opportunities presented with the sharing economy, and utilizing on property food and beverage options; balanced with careful monitoring of national hotel brand changes and increases in hotel ancillary fees will ensure a cost-effective, well-managed T&E budget that provides control and predictability with travel costs, driving positive results for your SME.

What steps is your SME taking to combat rising hotel costs? We’d love to hear your ideas.

Stay up-to-date on the latest travel trends is key to a successful corporate travel program. Download our whitepaper, 2016 Trends in Corporate Travel Management for the SME Marketplace for additional information.

2016 Trends in Corporate Travel Management for the SME Marketplace

Topics: business travel, Travel Trends