Hungry Hotels Offering Deals to Business Travelers

After years of dictating the terms to corporate travelers, hotels now find the roles reversed.

By Martha Lynn Craver, Associate Editor, The Kiplinger Letter

October 23, 2008

The balance of power is shifting from hotels to business travelers. For the past five years or so, hotels have yielded little in their negotiations with corporate travel managers. They have demanded, and gotten, annual rate increases in the double digits and have added extra fees and penalties. But the economic downturn, coupled with a slew of new properties coming on line in 2009, has dramatically changed the equation.

Companies are demanding, and often getting, a much better deal. Corporate travel managers are even reopening completed contracts under threat of going elsewhere next year. Most are pressing for free perks such as parking, breakfasts, Internet access, late checkouts and business center services. Companies planning big meetings may also be able to get conference rooms, setups and breakdowns and audio visual services for free or at a big discount, says Susan Gurley, executive director of the Association of Corporate Travel Executives.

Smaller rate hikes are in the cards for next year, even from four- and five-star hotels. "Four weeks ago, travel managers were opening negotiations at 2% to 3% over 2008 rates. Now they are asking for a decrease," says Bjorn Hanson, a professor at New York University's Tisch Center for Hospitality, Tourism and Sports Management. October through December is the traditional negotiating season for corporate rates at hotels.

To increase clout, businesses should consider reducing the number of hotels in a contract. In doing so, a business will be able to commit more room nights to the remaining hotels, which should entice them to offer a bigger discount, says DeAnne Dale of Travelocity Business. In the past, company officials traveling to big cities felt they needed to contract with multiple hotels to ensure they would find an available room. With demand down, that should not be a problem going forward.

Make sure the rate negotiated is good for all classes of rooms. If the discount covers only a standard room, and none are available, another room category, such as deluxe or premium, won't qualify for the corporate rate.

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