<B>Riddled Rates Audited</B>
By Bruce Serlen
After two years of sporadically monitoring the loading of preferred hotel rates into global distribution systems, travel managers in 2001 are becoming more vigilant auditors. Much to their dismay, buyers have discovered that accurate rates increasingly are not being loaded into the GDS and, too often, unauthorized "squatter" rates are appearing in place of the negotiated rates.
In response, travel managers said they were conducting rate audits more frequently and then complaining to hotels to ensure compliance. Travel technology vendor TRX Inc., meanwhile, this month began marketing a Web-based solution to automate the rate auditing process.
"In order to ensure that negotiated rates are available in the GDS, travel managers need to conduct a rate audit soon after the rate-loading deadline," said Rick Wakida, U.S. travel manager for Vodafone Americas Asia Region, based in San Francisco. "And confirm the ability to book every negotiated rate, including seasonal rates, in the preferred hotel directory in each GDS you use. Hotel chains and individual properties failing this audit should be notified and given a deadline to resolve the problem or face expulsion from the preferred hotel directory."
While rate audits might once have been conducted early in the calendar year to make sure hotels had loaded newly approved rates for that year, audits have become a year-round activity for many corporate travel managers.
"The problem has become so pervasive that we employ an intern in the travel department whose main job is to check to see that only approved rates are in the system," said Hanna Murphy, director of travel management shared services for Siemens Corp., in Santa Clara, Calif.
Often the abuse has gone undetected. "My sense is that many buyers don't know the extent of the problem--the number of hotels that don't have negotiated rates, but that have loaded rates all the same," said Colleen Guhin, global travel manager for ON Semiconductor in Phoenix. Guhin compared squatter rates to "a burr, persistent and annoying."
When hotels not in a travel manager's program load rates unethically, it has a detrimental effect on that manager's overall ability to negotiate. "Squatters end up bleeding volume from the approved hotels in a market," said Richard Wooten, now director of corporate travel services for Lockheed Martin Corp., in Bethesda, Md. (see story, page 3). "This makes it harder for buyers to go back to the approved hotels and get a good rate the following year because the volume won't have been there."
Yet, for Wooten, the rate loading problem isn't restricted to hotels not on the approved list. "Hotels in the program listing the wrong rates can actually be more of a problem," he said. Often, when final rates aren't agreed upon by mid-to-late December, hotel companies load unapproved rates and then don't delete them when final rates are decided. These then become squatters.
Rate loading first surfaced as a serious issue for many buyers a year ago when negotiated rates for 2000 weren't loaded promptly. Hotels responded that the problem stemmed from Y2K-related computer delays and would be confined to that one year. But when the situation grew even worse with 2001 rates, more buyers started to take umbrage and step up efforts to rectify the matter.
Explanations vary as to why squatter rates are in the system in the first place.
"They could just be a holdover from a group booking or they could be proposed rates that weren't accepted," said Steve Reynolds, executive vice president and general manager of TRX in Dallas, which launched its Hotel Check rate auditing software this month. "Or it could just be hotels knowing that a company's travelers visit their city a lot and wanting to make sure their rates are displayed on travel agents' screens."
For their part, hotels said they made every effort possible to load rates promptly and accurately. "We know it's important that once decisions get made that rates be loaded into the computers," said Bruce Wolff, Marriott International senior vice president for distribution sales and marketing. "Consequently, we work very hard to do that."
Wolff acknowledged that rate loading industrywide for 2000 might have been deficient. "We got a lot of feedback last year that said customers weren't as happy in this area as we'd like for all hotel companies," he said. "So, we made a very strong effort to correct any deficiencies. As a result, this year everyone who had a rate decision made by the month of November had it in the computers in the month of November to go into effect on Jan. 1."
Accordingly, hotel national account sales managers, such as Wolff, see the problem being mostly a timing issue. "This year, there were still a lot of customers who didn't make a decision until later," Wolff said, "and that makes it more difficult to get the rates loaded promptly. But by the buyer paying prompt attention, we think you'll get a very prompt response getting the rates into the GDS."
Overall, properties are responsible for loading the rates, Reynolds said.
"If you negotiate for Hotel X, for example," Reynolds said, "the property would go in and load your rate into the GDS. And there's no auditing as to whether what they loaded is accurate, if they loaded it right or whether they should have loaded it at all."
The responsibility for correcting the situation rests with the buyer. "Travelers don't know," Reynolds said. "If I'm making a reservation and Hotel X pops up with a $150 rate, I don't know if that's accurate, if my company has really negotiated a rate with that hotel."
TRX's Web-based Hotel Check product approaches the problem two ways. First, it conducts an audit to make sure the correct rates are loaded. Secondly, it compiles a database of squatter rates that don't belong in the system at all. A third phase is planned. "This will entail actually e-mailing properties," Reynolds said, "and requesting that they either load a rate or remove a rate, depending on the situation.