Biz Rooms Turning Up In Corp. Contracts

<FONT SIZE="+3"><B>Biz Rooms Turning Up In Corp. Contracts </B>

By Linda Humphrey

Since hitting critical mass this year, business-class rooms are finding their way into corporate contracts. Yet, while most midpriced hotels will grant business-class deals, many upscale chains-such as Delta, Hyatt and Westin-claim not to budge on the $15-to-$20 premium, instead adding the extra cost to a negotiated rate.

Automatic upgrades are rare as well, although most chains will bump up their best guests upon availability.

"We've been pretty firm in not discounting the $20 premium, because we really feel it's worthwhile," said Westin's Marsha Massey, director of business travel sales and marketing. "With breakfast, free local calls, newspaper and all the extras, most of our research said it was a bargain at $20."

Delta's strategy is to reserve Business Zone rooms for those who actually will use the equipment-and therefore are willing to pay the premium, a spokeswoman said.

AmeriSuites, which has just unveiled its Taking Care of Business suites (see story below), plans to introduce split-rate level negotiated rates rather than upgrades. "Complimentary upgrades would defeat the purpose of our investing money into the suite," said brand manager John Leavitt.

Rather than count on upgrades in occupancy-crunched hotels, many travel managers have negotiated a separate rate for business class.

"We've taken a tiering approach," said Bob Grant, manager of corporate travel for Charles Schwab & Co. "Rather than looking for free upgrades, we'll negotiate a standard executive floor price."

Other buyers haven't yet begun to negotiate for business class. At New York's Philips Electronics Corp., manager of corporate travel Bob Brunner now pays the premiums over a corporate rate and plans to tackle business-class negotiations next year.

At Sheraton, Gold Card members gain upgrades to Corporate Club rooms, and travelers often exchange frequent-guest points for business class, said Dan Geller, director of corporate sales. In focus groups, however, travel managers "told us that they are willing to pay the premium of $15 to $20," Geller said. "If you send a fax of three or four pages from the business center, that's already $20 in some cities."

In the midpriced arena, business-class negotiations are more flexible.

"I have not seen a hotel rate that is not negotiable in my 30-year career, in any city," said Stephen Phillips, president of Howard Johnson International, who also has worked for Hyatt, Delta and Westin. "If you can convince the hotel you have volume and clout, you can negotiate."

Several Ramada contracts state that all travelers stay in business-class rooms, and the chain's Business Card members gain upgrades when available, said Scott Deaver, vice president of marketing. The midpriced chain also features business class in many small-meeting contracts. As a competitive edge, a Ramada might offer business class at the standard rate as a closer for a meetings deal.

So far, Ramada has no national agreements for business class. "I would love to get to that point, but we need more hotels," Deaver said. Two hundred of Ramada's 900 properties currently offer business class, but Deaver hopes to jump that number to 400 or 500 by the end of '97.

On the economy side, negotiated business-class rates are rare, as corporations seek out the segment to save money, said Francis W. "Butch" Cash, Red Roof's chairman, president and chief executive officer. Self-paying business travelers favor the chain's Business King rooms, while corporate guests occasionally reap upgrades, Cash said.

The '90s climate, meanwhile, has lead many travel managers to forgo the business-class game altogether. "Many travel managers are looking for the best possible deal, without the extras," said Josie Schmidt, regional sales manager for Pan Pacific Hotels & Resorts. "They've had to tone down from the '80s."

Consultant Gerard Smith, senior partner at the T&E Group in Newport Beach, Calif., advises clients to negotiate separately for extras. "Even though business class might include breakfast, faxes and free calls, the traveler probably won't use all those amenities each day." Smith encourages travel managers to negotiate for amenities that benefit the traveler-such as complimentary shoe shine. "The traveler gets breakfast free whether you negotiate for it or not."

Still, travelers are booking business class at a frenzied pace. A recent <I>Frequent Flyer</I> reader survey found that 65 percent couldn't even get business-class rooms. And London-based Hogg Robinson BTI has found a rising trend in upgrades to more expensive rooms, based on its bookings for the first half of this year.

"We've created a group of travelers that wants something better than what the masses are getting," said Schwab's Grant. "Whether it's an upgrade on an airplane or in a room or drink coupons, they want something that recognizes their value to the business and makes them more comfortable."

Rising demand has even spurred the Sheraton Manhattan to convert every room to business class by next year. "We could probably fill three times more Corporate Club rooms than we have," Geller said.