For Inge Pirner, the fun stops short when the topic of negotiated rates arises. “I think it’s shocking that we all invest time in these negotiations and then when it comes to checking the negotiated rates, we realise something is wrong,” comments the exasperated Travel Manager at IT service provider Datev eG. “And if you then query it with the hotel, the response is ‘Oh, we have a technical problem here’ or ‘It was an accident’.”
Of course, Pirner is focussed on the potential financial loss. But she also has to manage to implement the associated necessary checks, “which I then have to follow up on, to see whether the rates that are uploaded match”. And on top of that, how am I supposed to track – or indeed prove – which categories had availabilities and which didn't?” That has to be demonstrated every time, possibly with a screenshot, which is an unrealistic undertaking, since availabilities vary in the individual booking channels and change constantly.
“So who's prepared to agree on rates if they then aren't adhered to?” summarises Inge Pirner. Since the phenomenon of incorrectly uploaded negotiated rates seems to have gone far beyond just the odd one-off case, VDR have recently launched a “Rate Uploading Task Force”, to identify sources of error and then eliminate these, as far as possible. Pirner: “It’s not just about the rates, it’s also about availabilities!”
One in six of all corporate rates is incorrect
Indeed, the topic of rate uploading seems to be an urgent matter. In a study carried out by the GBTA Foundation, more than one in six rates turned out to be incorrect. Further analysis of data performed by HRS even showed this value to be more than twenty percent: either the price wasn’t right or additional services were not adhered to as agreed.
But how is this even possible? How have things got to this point? The radical change to pricing policies in chains ten years ago is one of the reasons. No matter if it was Accor or Best Western, back in 2007, these chains deviated dramatically from their long-term volume pricing policy and suggested that their corporate customers complemented these with daily rates. Rates which then of course were subject to certain restrictions. The clear goal was to achieve maximum utilisation at the maximum price for each available room.
The hotel industry has been yielding to this since the nineties. Yet compared with airlines’ rate models, the pricing policy appeared rather basic. Only the triumphant progress of new media has enabled the hotel sector to apply pricing that can be adapted minute-by-minute to current demand, says Monika Gommolla, in charge of the German hotel chain Maritim. That's exactly what the hotel industry has then proceeded to do, resulting in a situation where the various booking systems are literally flooded with a wave of differing rates for the various room categories and additional services (extras).
Insufficient industry standards – a key source of error
Christian Temath, Director of Sourcing Solutions at HRS, also attributes four in ten rates being uploaded incorrectly back to the lack of industry standards. What begins in hotels with up to fifty different room categories extends to currency differences, right through to incorrect calculations about breakfast services. He admits it is no surprise, “if the field for entering extras is communicated via a free text box instead of the interface provided, then errors can easily be transmitted here.”
And then there’s then the booking paths and channels! Regardless of the way a company receives its negotiated rates, they’ve been communicated in multiple ways beforehand (refer to graphic). Let’s take Best Western’s rates. Indeed, the Sales and Marketing Director for Europe, Marina Christensen, says: “The error rate shocks me.” At the end of the day, both hotels and partners are “extremely interested in avoiding errors, for example in the volume rates negotiated with corporate clients”.
However, she imagines the biggest likelihood of errors occurring is during the momentum which gathers when the negotiated data is transferred from the CRS to other systems. For example, “at this point, GDS sends us a special Rate Access Code, which we then have to link to our data,” explains Christensen and adds laconically, “This is something ‘old school’, to some extent, as GDS and CRS systems have developed historically and inflexibly, and their functions have become obsolete. This often collides with today’s fast web systems that work very easily at the push of a button.” That’s why Best Western are continuing to focus on process and transfer chain automation in order to minimise error rates, Christensen goes on to explain.
But is that enough? At the end of the day, an error can occur at any point in the process chain – perhaps even during the RFP stage. All it needs is a hotel operator or his key account manager to make a numerical typo. Or it could even occur right at the very end of the process, because a company uses its travellers as the final stage of compliance checking. The conclusion? You’ll notice an incorrect rate.
Rate audits? Of course! Well, sometimes...
But is this really the case? HRS and GBTA Foundation wanted to find out more and surveyed Travel Managers across the world about how they handle negotiated rates. And lo and behold... incorrectly uploaded negotiated rates are just one side of the coin. The flipside reveals the rather half-hearted approach to the issue taken by corporate staff. In fact, according to the study, hardly any Travel Managers assumed that their hard-won negotiated rates applied to travellers correctly, without exception. Nevertheless, the main issue lies with checks rather than a laissez faire attitude.
Even though ninety percent of all respondents stated that rate audits must be carried out regularly, hardly any confirmed that such regular checks were performed. Quite the contrary, in fact. More than half (56%) only checked their rates when they were uploaded into the respective booking systems, perhaps once a year (refer to graphic). Only a minority (3%) checked on a week or monthly basis (6%). But what exactly do these checks look like? More than half (52%) of Corporate staff perform these internally, and indeed manually, a further 36% rely on the vigilance of their travellers and hope they will report such errors.
Quite simply, this leaves Kate Vasiloff stunned. As the Director of Research at the GBTA Foundation, she was jointly responsible for the study and now feels obliged to shake things up. “Companies are simply throwing money away,” she says, absolutely appalled. “Just because they aren't performing these checks!” And why not carry out such a simple step, when they've spent so much time and energy on the negotiations in the first place? Allegedly because they have no capacity for internal audits or outsourcing. “But these arguments are wrong,” Vasiloff emphasises. Simply by performing professional rate checks, companies would recoup huge amounts of money. Her plea therefore is, “audit and invest in your back-end systems!”
Real-time auditing in focus
“It's not a sexy topic, but it has huge potential,” concedes Sarah Busse, HRS Director of Sales Strategy & Steering. And it may be that many Corporate staff truly need the GBTA-HRS study to be aware of the importance of this matter, on the provider side, feverish work has long been carried out on developing checking mechanisms to go beyond the GDS rate audits that have been deployed as standard until now. The HRS team, for example, have recently automated auditing corporate rates as part of their sourcing solution. The company also has great expectations from the real-time rates auditing and filtering process, which is envisaged in the next step.
And the “Rate Uploading Task Force” in the VDR (business traveller association)? They have also decided to push forward the topics of standardisation and testing. Something that fits perfectly in line with the slogan, “Trust is good, checking is better.”
Download the study at: corporate.hrs.com/int/rate-protector