Hotels Might Not Like Where Corporate Rate Discussions Are Heading
Photo Credit: Hilton's new global cleaning standard is the latest in a wave of hospitality cleanliness protocols aimed at calming guests as they begin to travel following the coronavirus pandemic. Hilton
Skift Take
Hotel corporate program strategies aren’t straightforward at the best of times. A new “dual rate” pricing model could make lives easier for travel managers, but a lot more complex for the properties their employees will be checking in to.
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On the other side, there will be weaker demand ahead, with a depleted army of road warriors after widespread furloughing and layoffs, ongoing anxiety concerns, and an expected shift to virtual meetings. But with duty of care front of mind, more companies will want employees to book within the travel program, checking into designated hotels that meet stringent safety standards. As a result, travel managers will be issuing request for proposals to build their hotel program to strict Covid-19 specifications. Best Of Both Worlds One procurement director at an international company, who wished to remain anonymous, told Skift they're now looking at “dual-rate loading” for 2021, with fixed and dynamic pricing in place for each property. Traditionally, hotels don't accept both. "The fixed rate is effectively acting as a spend cap so corporates have good cost visibility for the year ahead, but they'll also have the dynamic aspect — a best available rate (BAR) discount — in place so that in a volatile pricing market, they pay less if that drops to the extent the floating discount is below the client rate," said Keith Watson, vice president of supply at technology platform Roomex. “Hotels don’t like dual-rate loading because it means we are getting the best of both worlds," added the procurement director who wished to remain anonymous. “With a dynamic rate, the hotels make their main profit in the peak times when the dynamic rate is above a static rate. With us, this part of the ‘curve’ would be cut off. Therefore this will not go down well as a suggestion.