Build a hotel programme
Follow our step-by-step guide to put together a hotel programme that will help reduce spend by consolidating to fewer hotels
The best way to reduce your per night spend on hotel accommodation is to set up a hotel programme which mandates bookings in one or two properties per location. It seems an obvious cost-saving exercise, as by placing the bulk of your bookings with a handful of hotels, those hotels are more likely to offer you a discounted rate. Yet, says Ryan Johnson of Corporate Traveller and FCm, it's amazing how many clients have no mandatory hotel programme in place. Many SME clients assume that their accommodation spend is not large enough to warrant hotels giving them a special rate. Read on for Johnson's approach to building a hotel programme.
STEP 1: The first step is to evaluate hotel booking patterns, locations, the rates being paid and room night volumes. To trigger a discounted rate you need to be booking between 30-50 room nights per annum in any one location or at least 100 room nights in London or Paris, for example. Your TMC can then draw up a report summarising where, when and how you are spending on hotel accommodation.
STEP 2: Your TMC should be hands-on and discuss the report together, alongside your hotel needs in terms of locations, types of properties, any rate cap and what needs to be included in the rate, such as breakfast or wifi. The aim is to draw up a shortlist of around four hotels per location. It’s also important to establish if you want an LRA (last room available) or non-LRA rate. Your TMC should ask for one in any case. Hotels sometimes display their intention of not wanting to offer an LRA rate by submitting an inflated price – £999 for example.
STEP 3: The TMC will then begin the negotiation process, beginning by sending a request to the shortlisted hotels with a covering letter emphasising that they have been selected by the client and TMC to tender for the programme. The advantage for SME clients is that unlike large corporates they are not restricted to setting up a hotel programme which runs for the calendar year. This means the TMC can approach hotels at any time of year to initiate a programme. The letter contains a standard suite of questions plus client specific requirements. These questions range from the obvious – any black-out dates – to the quirky, such as the distance from which local food ingredients are sourced. Greater London hotels all had black-out periods during the Olympics, for example. Each hotel has one week to come back with a proposal. The TMC then evaluates the acceptances, assesses whether the rate is suitable and re-negotiates if necessary.
STEP 4: Once negotiations are complete, each hotel is sent a letter of acceptance with instructions on how to load the client’s rates into the TMC's mainframe GDS. The TMC will create an online hotel directory featuring those hotels in the client's programme, and consultants will guide clients to book only with mandated hotels. There should be flexibility, however, so that if the TMC finds a better rate at any time that rate can be booked instead.
STEP 5: A good TMC will stage ongoing assessments of the programme, running reports to assess if the mandate is operating successfully and selected hotels are getting the nights they require to renew the deal in future. If booking mandated hotels hasn’t been part of you company culture, your TMC can help your staff by editing booking tools so that rates agreed in the programme have a higher preference.
STEP 6: Results! The savings made by Corporate Traveller for a recent client in one city alone were around £3,000 per annum. The average hotel rate in Delhi is £167 per room per night, but this was negotiated this down to £142 based on the client booking 120 room nights per year. This is just scratching the surface in terms of cost savings. The nature of SME business, however, is that without a hotel programme in place they tend to book the best available rate with last minute availability, which is costly.