Lanyon Aims To Offer Buyers Hotel Rate Integrity

December 18 2009  -  Tech firm Lanyon in January will launch a new product to help travel buyers overcome challenges related to hotel rate integrity including improper rate loading in global distribution systems and other hotel revenue management tactics that some say prevent travelers from booking negotiated rates. Hotel property revenue managers scan room availability daily and oftentimes "will look at rates that are a lower yield and close out those buckets and you will not be able to get the preferred last room available rate that you are expecting" said Lanyon chief commercial officer Michael Boult during a recent webinar. "Revenue managers can directly update the availability inside the property management system and inside the central reservation system and they will look at the occupancy levels and forward bookings and will look to maximize the hotels revenue." "Revenue management tricks by the hotels are always a concern" said Booz & Co. global sourcing manager Doug Weeks. "Weve had a rate [in New York City] this year and can almost never get it and by default our travelers are booking rooms at a couple of hundred dollars more per night." Though initial rate loading in GDSs has improved buyers still face obstacles from a process prone to human error. "Many times hotels dont get the rates loaded in the GDS until well into March" said Universal Music Group senior director of travel services Pamela Witherspoon. "We do two rate audits starting in January and are able to see if the hotels load the rates in the specified GDS. We are typically at about 60 percent at the end of December and hopefully 80 percent to 90 percent by March. It is probably the most frustrating process next to the hotels not answering the bids once solicited." Called Rate Bookability Lanyons automated rate integrity product will enable corporate customers "to create a customized review window check all preferred [rates] and send automated emails to the properties [noting] what days they failed [to offer the rate] and [in] what GDS" Boult said. During a conversation with Management.travel last month Boult said the tool "will look at all the properties [in your travel program] and give you a report. You can do it seven days in advance or 90 days--whatever you want--and it is going to find holes in [in the application of negotiated rates] so you can correct the problem before you book as opposed to going back through the expense reports after the fact." Lanyon claims its solution--to be priced with a per-use fee--could save corporate clients an average of $10 for every $1 invested. The company estimated that problems associated with rate integrity cost "global corporations an additional $3 billion annually in hotel expenditures." Other Tools Travel management companies and other tech firms for years have recognized hotel rate integrity problems and built or enhanced tools--including auditing services--to help buyers maximize their preferred rate agreements. During the first half of 2008 Sabres Travelocity Business built a point-of-sale product that generates an email for both online and telephonic reservations if a booked rate is higher or lower than the negotiated rate and notifies the traveler and travel manager. Additionally Sabre Travel Networks Hotel RFP Solutions technology built upon the BidStork product acquired in 2008 determines if loaded rates are higher or lower than the negotiated rate and notifies the hotels and the travel manager. BCD Travels Advito consultancy meanwhile enhanced its rate auditing tool in December 2008 to monitor rates in GDSs and identify discrepancies between what corporations negotiated and what actually is available to their travelers. "A number of our clients want updates periodically throughout the year to make sure that the hotels havent dropped any rates or made any changes that they shouldnt have made" said Advito vice president of business solutions Bob Brindley. "Rate integrity is key to traveler compliance to the self-booking tools" said Ingersoll Rand global strategic sourcing director Tom Barrett. He explained that his company relies on Advito to confirm rates via a request for proposals tool and works with agents to test rate availability in the self-booking tool "to make sure all the amenities are viewable." After enhancing a robotic auditing tool in 2004 to test future dates Carlson Wagonlit Travel can help clients track rates that become inaccessible in the GDS and send automated inquiries to the hotel properties according to CWT Solutions Group project manager Sherie Hermann. "The first line of defense is to audit the GDSs so that you can validate that what you have negotiated has been loaded in the GDS and available to book" Hermann said. CWT estimated that the initial margin of error after the first rate audit is 40 percent to 60 percent and 20 percent to 40 percent after a second audit. The LRA Wrinkle Different interpretations of last room availability add a layer of complexity to the issue of rate integrity. Some believe LRA means that a preferred rate should be available--although not always through the GDS--until the hotel reaches 100 percent occupancy. However hotels increasingly agree to LRA only on certain room types--and in some cases for a limited allocation of rooms--leading to confusion among customers. "Some travel buyers think LRA means any room in the house is available but not all hotels define it that way" said consultant Carol Ann Salcito of Management Alternatives. "Some hoteliers define it as only a standard room; you need to know and understand how it is defined and you have to be specific about the property itself." "If you have granted someone true LRA and that is your deal then what should happen from heck or high water is that last room gets sold at that price to that client" said Mark Carrier senior vice president of B.F. Saul Company Hotel Division which owns 18 hotels and franchises with Best Western International Hilton Hotels InterContinental Hotels Group and Marriott International. "However there are rooms out there that werent negotiated hard LRA and they get yielded out by the property management system and the rates are not available because it is sold out and has moved on to a much higher rate structure." "Most travel managers believe that LRA is what they want and need; however I am not convinced that it works to our advantage" said Universals Witherspoon. "Most people dont know really what it means. Hotel revenue management can close out a category at any time so it is important to know how many rooms are in that particular category and how often you obtain that rate. We need to use our relationships with our hotel reps to gain further understanding of LRA how it works with their particular hotel and why at certain times we are not able to obtain our negotiated rates."