The process of loading 2006 negotiated hotel rates into global distribution systems, which many corporate travel buyers typically would begin this week and complete by the end of the month, at many companies is taking a back seat to the challenging task of renegotiating and securing 2006 contracts. As such, hotels once again are offering to preload placeholder rates ahead of final contracting, in lieu of terminating 2005 rates after Dec. 31.
Although such practices concern some buyers, the sense among travel managers and suppliers is that some of the contentious rate-loading issues—namely timeliness and accuracy—are improving, especially in light of centralized approaches adopted by hotel chains and more efficient tactics exacted by buyers.
"November is a bizarre month," Christine Chippindale, senior director of travel industry sales at Choice Hotels International, said last week. "Every step of the process is actually happening: We're still getting bids in, we're still receiving rates from hotels, we still have client request-for-proposal deadlines, we're beginning to load rates, but the biggest thing we're doing right now is renegotiating."
Chippindale said that although this time of the year often brings with it quite a bit of renegotiating and yet-to-be-finalized contracts, the market conditions that left many buyers unable to secure ideal rates are further pushing back the next step of the process.
"We always have renegotiations, but this year they seem to be much more aggressive," according to Chippindale. "We're definitely seeing at least half of the programs that we send out coming back for renegotiation."
Brian Nichols, the National Business Travel Association hotel committee chair and hotel and ground transportation programs manager for Deloitte, concurred. "In general, most people started reasonably early, but the negotiating process is taking longer than what most people anticipated, mainly because the demand is stronger and negotiations are probably a little more difficult. Also, hotels are requiring a little bit more information than they would otherwise and that part is pushing it back."
While such companies as Deloitte are hitting their rate-loading timing targets, others have purposely waited to begin rate loading. Sybase travel manager Patricia Carlin said that in December she still would be focused on contract negotiating, leaving the prospect of rate loading to wait until the new year.
"Some negotiations have moved right along, are in the rate-loading phase or are already loaded," said Susan Beadle, director of the corporate market for InterContinental Hotels Group. "I will say that there are clients who are absolutely in the renegotiation phase and, just speaking generally, it is taking a little longer this year than in years past."
As many corporate contracts await final approval, hotel companies are following the lead of Marriott International and Hilton Hotels Corp., initiated last year, to preload rates before the current ones expire
(BTN, Dec. 6, 2004). While the practice last year raised red flags for some buyers that, once contracts were finalized, the wrong rates would remain in global distribution systems, hoteliers ensured that the rate-preloading practice leaves buyers with rates typically better than rack rates.
InterContinental is among those hotel companies that provide this option to buyers. "We'll have conversations with our customers in that regard," according to Beadle. "If we both agree that it's the right thing to do, then indeed we'll preload rates so that the travelers are not left with nothing to book after the new year begins."
Nichols encouraged other travel buyers to go this route if it looks like rate finalization will take a while. "What most buyers are hopefully doing—if they know negotiations are taking longer and it's pushing them later into December—is asking their hotel suppliers to preload the rates. There are two options: You could either extend the 2005 rate, which some hotel companies would not want to do, or preload the 2006 rates with the understanding that some adjustments will be made when rates are finalized. It's better to have at least a negotiated discount, even if it's a few dollars off, as opposed to paying the best available, or rack or published corporate rates."
While many buyers still may be concerned that rates loaded ahead of contracting will remain once negotiations are complete, John Asselta, senior vice president of Partnership Travel Consulting, and Nichols suggested making frequent audits a part of the ongoing process of rate loading.
"A lot of hotels, because it's such a massive project, bid and load the rates before they've been granted the business," Asselta said. "Then there are negotiations that take place and a final rate that gets decided on and that often is very slow to be corrected. It could be weeks or it could be months that people are paying the wrong rate. We encourage that someone do a rate audit."
While some note continual lags in loading rates, some hotel companies recently have ramped up technology to automate the process and chains increasingly have been centralizing rate loading across their brands and properties. "There's technology that hotels are enlisting to help facilitate a centralized rate-loading process but there's also technology that hotel companies have implemented to ensure that, as they go through the RFP process, they're accurately capturing all of the negotiations and changes to the rates that occurred during the process," Nichols said. "Then, before they load rates, they can audit their database and say, 'Here's what our clients said they're accepting. Let's make sure it's in our system before loading.' "
A Marriott spokesperson said the company was the first to automate the rate-loading process and has had such technology in place for eight years, making such enhancements as adding detailed rate data—including noting whether rates include high-speed Internet or free parking, for example—in the interim. Most recently, Cendant Hotels Group and Choice International have bolstered their systems and centralized processes to help streamline the process. Cendant Hotels Group in October rolled out new technology across its more than 6,300 properties to enable franchisees to more quickly and accurately load hotel rates for corporate clients
(BTN, Oct. 17).Meanwhile, Choice's Chippindale said the company's new tool, launched earlier this year, eases the burden on buyers by loading rates more quickly and accurately. "We're loading rates within three days right now," she said. "We guarantee within two weeks, but it all comes down to volume and somebody has to QC the data coming in. We can definitely expedite the process. We've launched this tool internationally as well, so our international offices are using it. Once the rates are loaded, the corporate travel manager gets an automated message from Choice Hotels saying, 'Your rates have been loaded to this rate code. Here are the rates that have been loaded.' "
"We've done it and it's proved to be very efficient," said InterContinental's Beadle of centralizing and automating the process. "It's cut down the time considerably. Our process was much more manual several years ago, but we've really evolved the process beautifully, so it is all managed out of a central location and handled on an automated basis."
Chris Kroeger, senior vice president of North America for the Sabre Travel Network said that, in addition to hoteliers ramping up their systems to further ease the rate-loading process, such GDSs as Sabre also have been making enhancements to streamline.
While Nichols said that such tools do help overcome challenges corporate buyers face with loading rates, an NBTA white paper about rate loading released earlier this year
(BTNonline, March 22) notes that many of the long-held problems with rate loading are more a matter of coordination and communication than of technology.
"Many rate-loading problems are a result of process, timing, and data integrity—not technological issues," the white paper said. "Some of the most common causes of rate-load failures and failed resolution attempts are incorrect rate-loading codes, confusing rate-loading instructions, ineffective communication with hotel suppliers, late acceptances, incorrect rates that do not reflect negotiations and insufficient rate audit information."
While such ailments to the rate-loading process remain, the consensus among buyers and suppliers is that the process has improved. "Every year they get a little bit better," said Maria Chevalier, vice president of hotel relations at WorldTravel BTI's Travel Procurement Solutions division. "We're hoping it will be the same this year."