Business Travel Executive, March 2020

18 SR SPECIAL REPORT as the best available rate In order for that to work it will turn off the king bed standard room and what shows up to the traveler is the suite for 300 and thats all they see Therefore they believe they are within policy and book that expensive room But in reality that king bed room is available at 189 but the hotel doesnt want to sell them at the low rate We call that a squatter rate a rate that wasnt negotiated but a clear scheme to get more revenue out of a company and upsell them to these more expensive rooms Reynolds says As a travel manager I dont want them booking suites at the hotel I want them to book the standard room at the hotel across the street that I also have a deal with at 189 he says But its hard to get that other rate off The benefits for a hotel are usually short term and include the ability to gain potential trial and traction and capturing market share from accounts they are targeting However these short term benefits may come at a cost as most buyers will be less likely to consider a hotel for inclusion in their preferred program if that hotel has loaded unapproved rates in the past Minimizing rate squatting can boost booking volumes to true client rates or to other rates available that provide higher value to the travel program Most travel management companies undertake rate audits to ensure that only the rates from preferred hotels are distributed through the GDS but rate squatting is still an issue While industry consolidation may be impacting rate squatting Waldmiller says travelers self booking through various online booking tools is a bigger culprit That traveler often doesnt have the in depth knowledge of what is actually correct They just see a rate description with their company name in it and often assume it is appropriate to book he says RoomIt by CWT generally defines rate squatting as when there is a negotiated rate loaded at a hotel that is not part of the clients program This could be due to many reasons including an old rate that has not been removed from the GDS even though the hotel is still in a program or a hotel is looking to gain an advantage in securing additional travelers they believe are coming into their market There is also squatting that may result because the rate was loaded inconsistently with the contract for example at a rate Travelers just see a rate description with their company name in it and often assume it is appropriate to book the way the company does business in many ways However she notes consolidation may be a great thing for travel buyers Oftentimes with many brands under one hotel company roof a buyers spend becomes naturally concentrated giving them more power to negotiate Lynch says Its also helpful for their travelers who will experience a consistent experience aligned with their loyalty preferences and still be able to explore several brands For example Lynch points out Wyndham Hotels Resorts clients can continue to book at brands like Wyndham Garden and Days Inn by Wyndham but now also have the opportunity to experience Wyndhams newest brand La Quinta They can have this diversity of experience across many of our brands while continuing to benefit from the Wyndham Rewards loyalty program Lynch says Hoteliers who can afford to consolidate can gain advantages of scale in how they manage their inventory and fluctuate prices to maximize their profit according to Geoffrey Waldmiller vice president performance optimization for RoomIt by CWT Travel buyers can be taken advantage of by hoteliers who tactfully manipulate their rates and inventory to optimize revenue against their corporate travelers he says Whose Rate Is It Anyway As the number of hotels in a program shrinks another less reputable competitive practice may come into play With this tactic known as rate squatting out of program hotels come in and load rates into the GDS or booking tools even if theyre not negotiated to entice travelers to book there instead of at the in program properties While squatters do provide travelers with lower than retail rates they may still be higher than the negotiated rates Alternatively properties that have been eliminated from the program may still be able load their rates using the old rate codes Either way the hotel is presented to corporate travelers as if it were a preferred property when its not So not only do these rates distort the hotel programs spend they dilute volume at preferred properties and create challenges in meeting expectations on their properly negotiated rates Rate squatting can take several forms Steve Reynolds founder and CEO of Tripbam gives one example a hotel revenue manager is looking for different ways to do a deal with a company but not deliver the discount especially during times of relatively high occupancy For instance a major market hotel may negotiate a deal with a company and to get that deal they offer a rate of 189 The client will require last room availability will put in blackout dates and seasonal adjustments but at the end of the day its just a rate that pushed the hotel to give a better discount than they wanted to provide he explains As a way to get around that they will also put in a suite and mark it as negotiated for that company Business Travel Executive askBTE com March 2020