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​How Travel Buyers Are Costing Themselves Money

Blog post   •   Nov 15, 2018 09:44 GMT

RoomIt by CWT just published a study with GBTA asking travel buyers and travelers about their hotel program to understand goals, policies, traveler behavior, and future program considerations.

Reducing program costs remains the top goal for many travel buyers, and, despite great effort, many are frustrated that their efforts have not been more impactful.

It turns out there were a few notions commonly held by travel buyers that actually lead to increased costs. We also identified areas where travel buyers can better align with travelers to reduce their spend.

Make use of hotel re-shopping tools

77% of companies don't use rate re-shopping tools, yet CWT clients cut their total travel spend 1-2% annually when using Price Tracking.

This savings begin by shedding the belief that corporate negotiated rate codes need to be booked in order to attain credit for the stay from hotels. Yapta can find a lower rate at the same hotel as a corporate negotiated rate 19-28% of the time. The average daily rate (ADR) will be reduced, and typically the stays will still be credited.

Look for non-refundable rates

Over a third of business travelers say the one thing they wish their travel managers could know is that they want to help save money and hate booking corporate rates that are higher than what they can find on their own.

Travelers often find non-refundable rates when searching for lower costs, yet two-thirds of travel buyers either require or recommend booking refundable rates only. It turns out travelers may be on to something.

On average non-refundable rates are up to 20% lower than refundable rates, and are only canceled 5%-6% of the time. If 100K nights are booked at $200 each - totaling $2 million -  you’ll be saving $400K usd while cancellations will only cost you $96K usd, meaning you’ll have over a $300K usd net savings.

Picture perfect: Can you negotiate lower fees for amenities like breakfast and WiFi? 

Consider bundled rates

Nearly 7 in 10  travelers believe they can save their company money over the long-run by booking slightly higher rates with bundled amenities, but only 1 in 10 travel buyers say they always use these types of bundled rates.

On average, WiFi costs $15 and breakfast costs between $10 - $20. If you have or can negotiate lower fees for those amenities, you can be sure travelers know they're getting a good deal when booking preferred rates.

If not, it may be time to consider other rate types, such as RoomIt Rates. These unique rates pair significant discounts with the amenities business travelers seek the most. By using these rates as the long tail to a hotel program, companies are realizing savings from a reduction in travel spend and by a reduction in hotel negotiation costs.

Educate your travelers 

Cutting program costs is always top of mind for travel buyers, yet one-third of business travelers would go over their rate by $31usd or more if they found accommodation that better suited their needs. In fact, 60% of travelers admitted they mostly book upscale and above properties with 24% saying they mostly book luxury stays. This stands in stark contrast with what travel buyers reportedly allow. Lack of education about travel policies may be the culprit here as most business travelers want to stick to policy. 

While 62% of companies communicate their travel policy to travelers in some form, the problem is that less than half of travelers claim to have actually seen them. This gap in knowledge grows significantly worse when comparing companies that require the use of travel tools and preferred hotels, and travelers that actually know that.

If educating the entire staff is too daunting or time consuming, start with your most frequent travelers and travel arrangers. Make sure they are clear about what type of rate caps and properties are allowed.

Achieve your goals

With some changes in mindset, hotel program costs can be reduced. First, be open to savings opportunities beyond negotiated rates. Second, find ways to close gaps between your travel program parameters and travelers’ needs and wants.

High program costs are not the only problem that can be remedied by increasing alignment between travel buyers and their travelers. It turns out that rectifying various misunderstandings can also lead to improved policy compliance as well. 

Blog author: Peggy Studer, VP Marketing, RoomIt by CWT 

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