Most organizations these days allow employees to choose their choice of travel products. But they focus on controlling the average business trip costs by enabling employees to book essential business travel products like hotels at less than public rates. Companies and startups negotiate with various hotels and hotel chains to ensure that employees book hotels at corporate rates.
Enterprises get corporate hotel rates by negotiating with hotels and hotel chains in different ways. Some organizations prefer negotiating with hotel suppliers directly through in-house travel managers or business travel consultants. At the same time, others find it convenient to get corporate hotel rates by using business travel management software or partnering with travel management companies.
Leading hotel chains offer corporate hotel rates to medium-to-large companies. Also, they determine the corporate hotel rate based on several parameters, including the average number of room nights or bed nights per annum. In the future, companies will continue to offer corporate hotel rates to enterprises to get repeat guests and leverage their word-of-mouth referrals.
Likewise, businesses from various regions and sectors will continue negotiating with multiple hotel suppliers to get off-market rates. But corporate hotel rates offered by the supplier will be impacted by several external factors and emerging trends. We can predict the future of corporate hotel rates
based on some of these existing and emerging hotel industry trends.
8 Trends that will Impact Corporate Hotel Rates in the Future
1. Global Inflation
According to the International Monetary Fund (IMF), the high inflation rate will fall gradually in most regions. But economic slowdown will make it challenging for many countries to meet inflation targets. The inflation rate will directly impact the prices of many products and services, including hotels.
Hotels typically set corporate hotel rates according to prevailing market rates. They allow employees to book accommodation at specific discounted rates. The high inflation will make hotel suppliers hike corporate rates in the near run.
2. Digital Transformation
During the COVID-19 pandemic, hotels minimize health risks through automation. They kept guests safe by supporting contactless payments and check-ins. Also, most hotel chains these days deliver 24/7 customer service by deploying AI-driven virtual assistants.
Hotel chains will continue the digital transformation to impress and attract leisure and business travelers. They will upgrade digital solutions to boost and personalize guest experiences. The investment in next-generation technologies will make them increase corporate hotel rates.
Millennial and gen Z work travelers passionately believe in reducing carbon footprint while traveling for work. While making a business travel booking, they opt for eco-friendly and green hotels. Most hotels are becoming environment-friendly by replacing plastic, using solar energy, and facilitating water conservation.
Many hotels even change designs and revamp infrastructure to appear cool and green. No hotel can become green without spending money. They have to recover the investment by increasing both market rates and off-market rates in the near run.
4. Differential Rates
Most hotels increase revenue using seasonal pricing strategies. They increase rates during high-demand periods and reduce rates as the occupancy rate decreases. Most hotels allow employees to get negotiated rates which are calculated after deducting a specific percentage as a discount from the market rates. Hotels will continue the strategy to make corporate clients pay more despite availing corporate rates.
5. Add-on Services
While traveling for work, employees need a variety of services to stay active and safe. For instance, they book car rentals to reach destinations and meet people on time. Likewise, they need concierge services to explore the city or get personal assistance.
Many hotels already increase revenue by providing ancillary services like meals, airport transfers, and conference rooms to work travelers. They will use upselling and cross-selling tactics to make business travelers avail of these add-on services while getting corporate hotel rates.
6. Day-Use Rates
Large hotels and hotel chains determine corporate hotel rates based on bed nights or room nights per annum. But small hotels attract corporate clients by offering day-use rates along with per-night and per-day charges. They allow work travelers to use a room for several hours by paying less than per-night rates. Many domestic business travelers will choose small hotels to get accommodation without paying per-night rates.
7. Rate Personalization
Most hotels these days use artificial intelligence (AI) algorithms to personalize the guest experience. They recommend the right room to work travelers according to their travel booking history and preferences. The increase in hotel rates will make many hotels attract corporate clients by supporting rate personalization.
However, hotels will personalize rates for business travelers in several ways. For instance, some hotels will help work travelers save money by offering personalized offers and discounts. Likewise, many hotels will reduce hotel rates when a work traveler makes payment in advance or opts for a non-refundable booking.
8. Alternative Accommodations
While discussing corporate hotel rates trends, we must not ignore the growing popularity of alternative accommodations. Many work travelers these days prefer homestays, service apartments, and similar non-conventional accommodations to luxury hotels.
Leading business travel management
solutions create opportunities for them to choose from a wide variety of accommodations while booking a business trip. Most homestays and service apartments are less expensive than hotels.
Hence, hotels have to compete with alternative accommodations to attract corporate clients and get repeat business. The competition will make them attract and retain large corporate clients by reducing corporate hotel rates. Also, companies will use these alternative accommodations as a tool to negotiate with hotels for better and lower rates.
Companies and startups will reduce the average cost of business travel by negotiating with hotel suppliers for corporate hotel rates. Likewise, hotel chains will offer corporate hotel rates to businesses to boost revenue generation. But there are several factors that will make it difficult for hotel suppliers to offer lower rates to corporate clients.
For instance, they will find it challenging to reduce corporate rates due to inflation and investment in digital transformation, and the cost of becoming eco-friendly. The huge popularity of alternative accommodations makes it essential for hotel suppliers to acquire and retain corporate clients by offering lower rates.