The National Business Travel Association hotel committee for the first time is taking action to address rate loading lapses. The committee plans to release on Sept. 15 a detailed timeline that buyers can use to ensure hotels remain on track. That date was chosen because it is early enough in the 2005 rate negotiating season that hotels will have no excuse for failing to load rates accurately and in time to take effect Jan. 1.
According to committee members, buyers frustrated with rate loading inequities have begun penalizing delinquent hotels and even dropping them from their program, so NBTA's intervention comes at a critical time.
While many buyers are quick to point a finger at their hotel partners, the NBTA committee has gone to great lengths not to solely blame hotels. "It's not a good guy-bad guy situation, but a joint endeavor between buyers and suppliers," said hotel committee member Brian Nichols, who co-chaired the rate loading initiative. "Physically, hotels actually load the rates, but buyers' actions have a large impact on the end result of the process."
Steps buyers take early in the process have consequences later. "Buyers need to maintain clear communication with their supplier hotels during the request for proposals, negotiation and acceptance periods to ensure that the right rates are loaded. Buyers also are responsible for providing accurate and clear rate loading instructions to their suppliers on a timely basis. Otherwise, the process will fail," said Nichols, who is hotel and ground transportation manager in strategic procurement services at accounting company Deloitte in Wilton, Conn.
Similarly, it is up to buyers to indicate a date when they realistically expect rates to be loaded fully. "Start talking about what's workable for both parties. That way, buyers and suppliers can agree, and nothing's left to chance," said committee co-chair Catherine Ascolese, who is associate director of the hotel program for accounting firm KPMG in Montvale, N.J.
Travel buyers do not always collect the right data to provide to hoteliers, according to Laura Thompson, subscriber consultant for hotel distribution at Sabre. Pseudo-city codes are key.
"Each agency booking hotels for an account, even if it's a small mom-and-pop operation, has its own pseudo-city code, which the buyer has to provide, so the hotels know to allow these agents access to the rates. International agencies are at a particular disadvantage," Thompson said. "Providing these technical tables is the buyers' responsibility. They do not need to have a high level of understanding, but they do need knowledge of the basics of rate loading."
From the hotels' perspective, the earlier they can get the data, the better. "Some buyers think we're going to preload their accounts, which leads to concern about squatter rates, but this isn't true," said committee member Lauren Hulsey, who is director of solicitation management for Hilton Hotels Corp. "The reason we want the data early is that it often can be voluminous and we validate every pseudo-city code."
Squatter rates refer to the unethical practice where hotels not unauthorized by the buyer load rates in the global distribution system as though they were approved negotiated rates.
The NBTA's new aggressiveness comes none too soon. When American Express Corporate Travel, for example, launched its Hotel Rate Trax product in June, vice president of marketing Andrea Levine estimated that more than 40 percent of negotiated rates were flawed. "Negotiated rates are either not loaded at all or they're loaded inaccurately—and that estimate is conservative," Levine said
(BTN, June 7).Buyers are losing patience.
"Some have started to fine hotels if they don't have the rates loaded by x date or kick them out of the program," according to Ascolese. "By comparison, companies that act aggressively with their hotels find that by February a much higher percentage of their rates are loaded and loaded correctly."
Once rate loading improves, there will be less of a need for buyers to audit their programs, which can be both time-consuming and costly. "Some buyers have begun auditing rates as often as monthly, while many others do it quarterly. They see no other choice," according to Ascolese.
At one time, rate loading was viewed as separate and distinct from the RFP process; not any longer. "The past few years especially, both buyers and hotels have come to understand it's all part of one big process," said committee member Anne Asch, who is director of e-distribution marketing and operations for Starwood Hotels & Resorts Worldwide. "In the same way, five years ago buyers did the negotiations for their hotel program, but depended on their travel agents to get the system up and running. Now they're much more involved in all aspects of the technology."
There is no single commonly used format for rate loading the way there is for RFPs, an area where NBTA also has played a pivotal role. By the 1999-2000 negotiating season, the NBTA electronic RFP format had become the industry standard, updated for each bid season by the committee
(BTN, Feb. 9).Thompson and Hulsey are among those who think the committee's proactive stance on rate loading may be a first step to creating such a standard. "Every buyer right now uses their own format, and it's caused problems. It's where we were 10 years ago with the RFP. Rate loading instructions need to be formatted just the way the RFP is, probably on an Excel spreadsheet that the hotels can work with," Thompson said.
"Wouldn't it be lovely if all buyers submitted the required information the same way?" Hulsey added. A lack of uniformity exists internally on the supplier side as well. "Right now, Hilton has its own quality checks in place," she said, "as do other hotel companies, but there's nothing comparable industrywide."