Buyers Boiling Over With Rate Loading Frustration

Travel managers are more frustrated than ever with delays in getting negotiated hotel rates loaded into global distribution systems accurately and efficiently.

The primary culprit was last fall's drawn-out request for proposal season, which resulted from the lagging national economy and Sept. 11. Negotiated rates often weren't finalized until late December or, in some cases, mid-January, which left less time than usual for rates to be loaded. Meanwhile, many buyers have taken a harder line on rate loading inconsistencies because they're under more pressure from senior management to achieve even modest cost savings.

"Rate loading was more problematic this year than ever before," said Bruce Miller, travel manager at Fleet Boston Financial. "We had made the choice to work mostly with hotel vendors who had partnered with us in 2001, so given that the relationship was already in place, we've had absolutely no tolerance when rates we find in the GDS aren't the ones we agreed to."

Consequently, Miller was taking an aggressive stance in checking to make sure that the rates loaded are correct and then rectifying any errors. "The days are over when companies like ours can afford to be laid back about these things," he said. "Every night that a traveler pays a rate that's higher than the negotiated rate, we're at a disadvantage. Therefore, loading rates accurately and quickly is not an option for our hotel partners."

Miller said that, too often in the past, hotels offered vague assurances that "it'll be taken care of." That attitude no longer will suffice. "Similarly on our part, this isn't something that we'd 'like' you to do, it's an absolute requirement," he said.

Given the amount of the discrepancy in dollars and the number of room nights involved at heavily used properties, potential savings are significant. Accordingly, Miller said that when errors surfaced that were in the hotels favor, his staff began billing for reimbursement.

Buyers can't assume rates are loaded. "At a minimum, we've done random checks and, when the situation has warranted, we'll conduct a more thorough audit," said Richard Kessler, vice president of supply management for Mestek Inc. in Westfield, Mass. Kessler ascribed delays in the RFP process during the fall to hotels' reluctance to quote rates. "After Sept. 11, in many cases they didn't know what their pricing strategies were going to be, so they waited until the last minute to give us the quotes we were looking for."

To avoid not having any rates in the system on Jan. 1, some buyers allowed hotels to load multiple rates in the GDS. "We instructed our preferred hotels to load every rate they offered us," said Claudia Bonetti, business manager for hotels, meetings and groups at Lockheed Martin in Bethesda, Md. "When rates were then finalized, it was easier to delete the incorrect rates than to first start to load the correct rates." Bonetti said, however, that this approach required close auditing to ensure that what are called "squatter" rates weren't inadvertently left in the system.

Another short-term strategy entailed simply extending rates that were already in the system from 2001.

"It was important, after all, that there be some rate in the system so the agent could book the reservation," said Stefan Moritz, director of product development for Nexus World Services, a technology provider to hotels. Moritz referred to these as "bridge" rates that would be removed once final rates were set.

To make the job even tougher, buyers said rates had to be correct, not only in the GDS, but in the agency's system. "In a kind of second wave, those of us who use online booking tools also had to be sure the rates were correct there as well," said Colleen Guhin, global travel manager at On Semiconductor in Phoenix. "Theoretically, online booking tools pull rates from the GDS, but discrepancies can occur."

Ensuring rates were loaded consistently in all channels is to her benefit she said, noting, "It takes time to verify, but in the end the follow-up is worth the effort because it avoids confusion."

Discrepancies can be minimized when buyers are proactive from the start of the RFP process. "Rate loading's just as important as negotiating rates," said Rick Wakida, U.S. travel manager for Vodafone Americas in San Francisco. "A lot of attention is paid to getting bids and making selections, but the process isn't over until the rates get loaded."

Especially in today's economy, when companies are under intense pressure to cut costs, the urgency to get rates loaded increases because they want to see the savings they've negotiated," he said. "Otherwise, the savings exist only on paper. They're not real."

Furthermore, it's to preferred hotels' advantage to promptly load rates. "Travel counselors can't book what's not in the GDS," Wakida said. "Therefore, preferred hotels that get their rates loaded first have an advantage over preferred hotels that don't."

Through the second half of 2001, many hotel companies renegotiated rates with buyers. Accordingly, those revised rates had to be loaded into the GDS each time. "All the back-and-forth created the possibility for error," said Cheri Shanks, manager of corporate hotel programs for TQ3 Maritz in St. Louis.

It also created an administrative bottleneck for many hotel companies," "Typically, hotel companies have a GDS department whose job this is," said Alison Guilbeaux, director of business development and hotel consulting for WorldTravel BTI in Atlanta. "But where they had to mobilize once a year to get all the rates loaded, it had to be done as many as three times in 2001."

Clearly, the return on rate loading presents an opportunity for travel managers. "Hotels may not represent the largest spend, compared to air, but the opportunity to increase your percentage of savings is greater," Fleet Boston's Miller said, "and rate loading is certainly a part of that."