Business Traveler Rates May Be Outdated

New study says hotel occupancy and room rates have risen, giving corporate travel managers little bargaining room

The results of a New York University study show that fewer hotel deals may be offered to business travelers next year and rates for rooms could rise as much as 5 to 6 percent. Bjorn Hanson, divisional dean of NYU’s hospitality school, says that every fall hotels and United States companies negotiate amenities and corporate rates for the following year. This year they are further apart than in recent years.

Thirty percent of the lodging industry revenues come from contract rates as well as 20 percent of room occupancy nationwide. Now that the economy has improved, average daily rates and occupancy levels are up across the country. People are once again traveling and hotels are not as willing to drop rates or throw in rewards. Hanson, who based his study on financial data and a survey of industry executives, says the average daily rate went up about 4.5 percent overall and the average corporate rate increased by about 5 percent.

Rather than luxury properties, corporations will most likely send their employees to limited-service and select-service hotels, says Hanson. With the downturn in the economy and lack of travelers, corporate travel managers persuaded full-service hotels to throw in perks such as use of a fitness center but this is no longer the case. “Some of the business travelers have been able to use the fitness center and not think about charging it and getting it approved, and now those travelers will have to be aware of the corporate policy,” says Hanson.

The study also showed that corporate policy is trending away from a negotiated rate, which is appealing to young Millennials that like to make their own travel decisions. Hanson says that these companies allow their employees to choose their own hotels as long as they do not pay above a certain price.

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