Cos. Add Room Rate Audits

An increasing number of travel buyers—faced with chronic rate loading troubles that are adding unnecessary costs to their hotel programs—this year found annual audits were insufficient to stem the problem and have begun auditing rates quarterly and, in at least one case, monthly.

"Though the process is highly laborious, we've started auditing rates every month because quarterly is too late to make up the extra charges we've paid," said Gregory Herrera, manager of corporate travel for Raytheon Co. in Long Beach, Calif. "We monitor to make sure that only the rate we have negotiated is loaded in the global distribution system and that there are no upselling rates in the system."

In Raytheon's online booking tool, for example, Herrera said that under the preferred hotels listing, the company's negotiated rate will appear, but another Raytheon rate or rates may be loaded as well. These rates may be for more expensive concierge floor rooms or for the penthouse. "Neither of these rates belongs there, but as far as our travelers know it's the preferred hotel so it must be a preferred rate. As a result, they book it." Raytheon has 626 hotels in its global program this year.

Brenda Miller, operations manager for hotel services for TQ3 Travel Solutions, estimated that 50 percent of rates either were loaded incorrectly or not loaded at all in early 2003 before any auditing had occurred. "The same estimate applied for squatter rates, rates that hotels had loaded to hold a place in the GDS and then didn't remove," she said. "In today's environment, buyers are conscious of every dollar being spent. Understandably, they don't want to pay a higher rate than they were able to negotiate."

Laura Thompson, hotel program consultant at Sabre Travel Network, estimated that 30 percent of buyers have not audited rates at all in 2003, while 50 percent planned to audit them once. Typically, that one audit occurred in the first quarter, but the remaining 20 percent expected to conduct audits periodically throughout the year.

Thompson said she recommended that audits be done quarterly and be comprehensive. "Sampling works with a lot of assessment, but hasn't really been effective with auditing. Even with properties within the same chain, you'll see loading inconsistencies," she said. To be effective, the process should audit the actual rates in live availability in the GDS.

The practice of buyers adding hotels to the program during the calendar year, which has become increasingly common in the market downturn, has raised the stakes on rate loading even higher. "This would suggest that buyers don't want to conduct an audit in January or February, if by June or July either they have new rates or the rates may have been in the system and fallen out," said Ruth Philpott, manager of hotel programs at American Express Consulting.

At Raytheon, rate auditing this year became the responsibility of the company's travel agents. "We instituted a program called Hotel Excellent in which we give each dedicated travel counselor a certain number of hotels to monitor every month," Herrera said. "They then report back to us for which hotels the rate mysteriously has disappeared or the rate has changed."

Herrera and his team follow up by forwarding the names of the errant hotels to the appropriate chains' national account managers and to the hotels themselves to fix the situation. "The Hotel Excellent initiative gets the agents a little more involved in what we're trying to accomplish with rate loading," Herrera said. "It's to their benefit as well, of course. If the rate is accessible as it's supposed to be, there's less manual effort required of them and, hence, less frustration on their part."

While he sees progress, thanks to the monthly audits, Herrera still holds NAMs to task. "Why aren't these managers taking greater ownership of the problem? With the technology and resources they have at their fingertips, they should be auditing their own hotels' rates themselves," he said. "Send an e-mail blast to all Raytheon's preferred hotels under each chain flag, instructing them to confirm that the rate in the GDS is the rate that the NAM had negotiated."

In extreme cases, consultants said clients had considered eliminating non-compliant properties from the hotel program. Yet, such a step, they cautioned, could have an unintended downside.

"For buyers, it's risky to go this far, especially if the hotel is in a good location and popular with travelers," Thompson said. "Dropping the hotel would inconvenience travelers—if there's no nearby alternative—over rate loading, an issue they know nothing about, nor should they."

Many buyers continue to be frustrated by ineffective rate loading, but not all act on their displeasure. "Auditing rates regularly," Philpott said, "tells hotels buyers now are prepared to take ultimate responsibility for the problem."