Rolling Over 2020 Hotel Rates to 2021…

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 …Is a Great Move if You Want to Lose Money

If you work in procurement or are responsible for your travel spend it is your duty to your organisation to ensure you’re procuring for cost-efficiency and quality. It may seem an obvious point to be making but it looks like some people need reminding. Here at Business Travel Centre we do that on behalf of our clients and we will be constantly monitoring this over the coming months as we begin to come out of lockdown and there is a lot of conflicting information right now.

In a recent release from the Global Business Travel Association, the organization endorsed the rollover of negotiated rates from 2020 to 2021 and skipping the 2020 negotiation for new rates altogether. I would be very wary of adopting this policy wholesale.

I’ve heard some in the industry say, “We don’t want to kick the hotels while they’re down.” But when was the last time a hotel chain or property offered you a greater discount because your business was down? My guess is never. In fact, they likely removed the discount because your volume dropped. That’s because it’s not personal, it’s just business.

Alternatively, what if I’m a chain seeing this moment as an opportunity to finally capture market share? I’ll want to sit down with corporations and provide good deals to show that I can be a strong partner, and I can’t do that without a negotiation.

How should a company manage hotel procurement during and post-COVID-19?

Based on data, as well as research from consulting firms, hotel chains and property ownership groups, I believe rates will be highly volatile for the remainder of 2020—and likely well into 2021 and 2022, too. As travel returns, demand will outpace supply due to closed hotels. Hotels will scramble to reopen quickly, which will then reverse the trend and cause supply to outpace demand. Revenue managers trying to increase occupancy and revenue per available room will raise and lower rates more frequently than they have during the past decade.

To sum it up, rates will remain low overall and likely stay lower than negotiated static rates. By working with Business Travel Centre you can have confidence that as we always do we will continue to monitor BAR (best available rate) versus our negotiated rates, meaning we will always book you the rate that is most advantageous to you. In addition, we will be looking at negotiating even better deals going into 2021 and beyond and making you aware of the suppliers that would be worth pushing your travellers towards as they perform well for you.

In essence, you have to have a fluid plan and we can do this for you. If you want us to look at your hotel program please do not hesitate to get in contact with us.

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