Reduce Cost Hotel Program
Categories Corporate Travel

The smart way to reduce the cost of your hotel program

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Helen works as a Travel Manager at an international fashion company, looking after their hotel program. She oversees travel arrangements, develops policies, manages budget and negotiates with vendors. Thanks to her efforts, employees travel all over the world meeting clients, suppliers or colleagues in other offices.

Helen loves her job, but sometimes it’s challenging and wearisome. Often, she must strike a fine balance between her travelers and her managers. And, not always both sides are happy. Her boss is the company’s CFO and demands a tighter travel budget. Her travelers and employees want a certain degree of freedom to choose where they stay and how they travel for business.

Over the years, Helen has developed a comprehensive travel policy and an effective hotel program. This allowed her to bring savings, while keeping her travelers happy.

But it’s work in progress. With hotel rates predicted to rise up to 4% next year, Helen needs to continue to optimize her hotel program. Fortunately, she has a strategy.

What makes a successful hotel program

Successful hotel programs are built around two main areas.

1) Sourcing

Corporate rate programs are a straightforward way to save money on your hotel costs. The idea is simple: you promise a good amount of business and hotels are willing to give you a good deal. How much leverage you as a Travel Manager have will depend on your booking volume.

Procuring content for your hotel program can be tedious. Travel Managers must choose the right hotels, handle requests for proposals and negotiate deals. Usually this is an annual exercise. Once done, businesses and Travel Managers can offer competitive rates to their traveling employees.

2) Monitoring

Work does not end there. Securing the best hotel rates and content is only the first step. Nowadays Travel Managers must be fluent in spreadsheets, analytics and metrics to evaluate the success of their travel program. Looking at data from bookings, stays and payment methods, you are able to identify travel trends and patterns, spend on specific days, availability of different properties and rates that are being booked.

Gathering and compiling this data is not enough. A deep analysis is essential to measure the impact of a hotel program on travel budgets. This does not mean Travel Managers must be expert data analysts. Fortunately, corporate booking tools like Hotelzon offer a suite of automated reporting options to optimize hotel spend.

Ask yourself these questions. Are your travelers staying at negotiated suppliers? How do you track rogue travelers, booking outside of policy? How do your hotel rates compare to others?

If you don’t have a clear answer to these question, it’s time to define some metrics to measure the success of your hotel program.


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Metrics that matter

When you’re thinking about maximizing your hotel program dollars, you want to gain valuable insights on how your travelers are booking. Often Travel Managers struggle to find the right metrics that will show the success of their hotel program, and provide leverage for further negotiations.

Some metrics, like cost per stay, can be useful to look at because they can tell you at a glance whether travelers are keeping costs in check. However, these global metrics may not identify what parts of your hotel program are broken or where you need to focus to improve your program.

Other metrics, like booking visibility or contract competitiveness, are more revealing when it comes to show if travelers are taking advantage of your rates.

Here are some of the most useful metrics Travel Managers should regularly follow to analyze the effectiveness of their travel programs.

  • Cost per stay — The average cost of a hotel stay.
  • Cost per destination — Identify the most expensive destinations.
  • Total spend under contract — The amount of hotel spend dedicated to negotiated rates.
  • Contract competitiveness and benchmark — How good your negotiated rates are against market averages by city, country or hotel chain.
  • Booking visibility — It measures the amount of bookings done via company preferred tools.
  • Realized negotiated savings — It measures how much you saved through the negotiation and adoption of hotel rates compared to market rates.
  • Exceptions — The percentage of bookings outside travel policy.
  • Advanced booking non-compliance — It measures the costs of booking hotels after the company advance booking recommendations.
  • Re-booking rates — What is the cost of cancellation and re-booking fees?
  • Room night per hotel — How often travelers stay at the same hotel?

Takeaway: Monitor these metrics frequently, so allow the flexibility of your program, implement quick adjustments as needed.

Regaining control of your hotel spend

Once you have the above data, you should be able to identify which areas of your hotel program require some adjustments.

#1 Ensure the visibility of your negotiated rates

You negotiated rates must be both visible to your employees and easy to book. A corporate hotel booking tool like Hotelzon will quickly load your rates into the systems, assuring bookings are compliant with travel policy. Driving all your hotel bookings to a single place

#2 Implement hotel spend limits within your corporate travel policy

Overspending may constitute up to a third of your travel and expense budget. When it comes to accommodation. Set spend limits by city, particularly capitals or top destinations, is an effective way to help your employees find the right properties when booking a hotel. For example, you can allow a higher limit in an expensive city like Amsterdam, and enforce cheaper rates in more affordable destinations. In both cases, travelers will have the flexibility to stay at a hotel of similar quality, without overspending due to the higher or lower costs of a city.

#3 Negotiate with your most frequently used suppliers

This is when having robust report data comes crucial. Consolidate all your stays into one property or chain to present a bigger booking volume. This way, you’ll have more leverage in the negotiations. If the number of your bookings is not very high, Hotelzon offers its own negotiated rates.

#4 Carrots and sticks

Forcing tighter spending limits and restrictive travel policies will likely irritate your travelers, no matter how necessary these measures might be. Companies in this situation may punish employees who overspend on their trips, but a policy that relies on sticks will increase employee dissatisfactions. Other companies implement a rewards-based solution to offer incentives for employees to save money. Often, these attempts are based on gamification, applying game playing elements to travel in order to influence employees to book an affordable hotel.


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